Webjet to buy Dubai-based travel business for $240m
Written on the 5 November 2018 by David Simmons
Listed travel agents Webjet (ASX: WEB) are set to acquire Dubai-based travel wholesaler Destinations of the World (DOTW).
The acquisition, worth $240 million, follows the company's acquisition of JacTravel in 2017 and is expected to be complete on 22 November.
The Dubai-based DOTW operates in the Middle East, Europe, Asia Pacific, and the Americas. It connects hoteliers with travel agents, online travel agents, tour operators, and third-party wholesalers.
The company says the acquisition will boost the operations of its online hotel comparison website WebBeds.
Webjet managing director John Guscic said the DOTW purchase would increase global WebBeds contracts from 23,000 to 28,500.
"The acquisition of DOTW continues to consolidate WebBeds' position as the clear number two player in the global B2B market," says Guscic.
"In addition to providing 5,600 unique new contracts, the overlap in existing directly contracted hotels will deliver increased depth to our global inventory."
In the last financial year, DOTW generated total transaction value of $734 million and earnings of $22.7 million.
The acquisition will be paid for in cash and new Webjet shares, funded by proceeds of an entitlement offer (to raise $153 million) and $102 million of debt funding, including a new acquisition debt facility.
In addition, approximately $28 million of new Webjet shares will be issued.
This morning the company also announced its guidance for FY19, saying it is on track to deliver at least $110 million in earnings for the existing businesses. This is compared to earnings of $87.3 million in FY18.
Webjet shares closed at $12.91 per share on Friday afternoon.
Business News Australia
Author: David Simmons