Webjet expands with online purchase
"Zuji offers significant synergies and gives Webjet a platform into Asian markets." Analyst Belinda Moore
The managing director, John Guscic, said the acquisition of Zuji would allow Webjet to "substantially expand" its presence, particularly in Asia, and help fast-track its hotel contracting and online distribution.
Zuji, a subsidiary of Travelocity, is the biggest online travel agency in terms of air ticket sales in Hong Kong and Singapore. It generated $US31 million in revenue this year.
An RBS Morgans analyst, Belinda Moore, said the purchase of the Zuji operations appeared to be a "very attractively priced" acquisition of a well-known online travel brand.
"Zuji offers significant synergies and gives Webjet a platform into Asian markets - it all makes strategic sense," she said. "This is a key platform of growth for the group."
Webjet will raise $25 million to fund the purchase of Zuji via a placement of about 6.9 million new shares.
The placement will be offered to institutional and "sophisticated investors" at a fixed price of $3.60 a share, which is a 6 per cent discount to Webjet's closing price on Tuesday.
The Zuji purchase is subject to conditions, including regulatory approval, and is expected to be completed in the first half of next year.
Webjet will incur $5 million in transaction and restructuring costs from the purchase.
The company spooked investors last month when it warned of "very low growth levels" in the leisure travel market over the prior four months. Its share price sank by 15 per cent following the disappointing update on trading conditions but has recovered some lost ground.