On 5 November 2018, Webjet Limited (ASX: WEB) announced that it has entered into a binding agreement to acquire Destinations of the World (DOTW) for a total value of A$240 million. DOTW is a market leading B2B travel business that operates across the Middle East, Europe, Asia Pacific, and the Americas and it has generated Total transaction value (TTV) of A$734 million and EBITDA of A$22.7 million in FY 2018.
The purchase price of A$240 million is representing 10.5x FY18 EBITDA pre-synergies and 7.5x FY18 EBITDA post A$14 million of combined revenue and cost synergies and assuming any earn-out is paid in full. The Acquisition will be funded by an entitlement offer, debt funding and an issue of new Webjet shares and DOTW’s existing private equity shareholders. The Entitlement Offer will raise around A$153 million and as per the offer eligible shareholders are invited to subscribe for 1 new Webjet share for every 9 existing Webjet shares held as at 7:00 PM (Sydney time) on Wednesday 7 November 2018. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]
The cash consideration for the Acquisition will be funded by the proceeds of the Entitlement Offer and A$102 million debt funding, including a new acquisition debt facility. In addition, approximately A$28 million of new Webjet shares will be issued to continuing management shareholders and the private equity vendor of DOTW at an issue price of A$12.77 per share. The shares issued under the Vendor Share Placement will represent approximately 1.6% of Webjet’s issued capital after completion of the Entitlement Offer. After the acquisition, Pro-forma Net Debt / FY18 EBITDA, before synergies, will be less than 0.8x, which ensures continued balance sheet strength and capacity to pursue further growth opportunities. The acquisition is expected to complete on 22 November 2018.
In the guidance for FY19, the company announced that it is on track to deliver at least A$110 million underlying EBITDA for the existing businesses for the year to 30 June 2019. Webjet is expecting the pro-forma EBITDA for the DOTW business for the year to 30 June 2019 to be at least A$23 million. After the acquisition, Webjet is expecting DOTW to contribute incremental EBITDA of at least A$10 million for the year to June 2019, pre-synergies. The company is expecting that the acquisition of DOTW will generate incremental cost and revenue synergies which include anticipated cost synergies of A$4 million per annum and revenue synergies primarily relating to the distribution of WebBeds’ and DOTW’s unique directly contract hotel inventory through the various WebBeds platforms of A$10 million per annum.
WEB’s shares are currently trading at a halt, were last traded at $12.910 with a market capitalization of circa $1.55 billion.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.