On 12 November 2018, Webjet Limited (ASX: WEB) opened its Retail Entitlement Offer with an invitation to participate in its 1 for 9 accelerated non-renounceable pro-rata entitlement offer for new Webjet ordinary shares at an issue price of $11.50 per New Share. Following this news, the share price of the company decreased by 2.341 percent as on 12 November 2018.
Earlier in the month of November, the company announced that it is planning to raise approximately $153 million through an Entitlement Offer with an intention to use the net proceeds for the acquisition of DOTW Holdings Limited and transaction costs. Under the Retail Entitlement Offer, eligible retail shareholders in Australia and New Zealand have the opportunity to subscribe for 1 New Share for every 9 ordinary shares in Webjet at the price of $11.50 per New Share, which is the same price as the institutional investors who participated in the Institutional Entitlement Offer. The issue price of $11.50 per New Share is representing an approximately 9.9 percent discount to the theoretical ex-rights price of $12.77 on 2 November 2018
On 5 November 2018, the company entered into a binding agreement to acquire DOTW for an enterprise value of US$173 million (A$240 million). The cash consideration for the Acquisition is planned to be funded by the funds of the Entitlement Offer and A$102m of debt funding, including a new acquisition debt facility. In addition, approximately US$20m (A$28m) 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 Record Date for eligibility in the Retail Entitlement Offer was 7 November 2018. The Retail Entitlement Offer will close on 22 November 2018, and the results of the entitlement offer will be announced on 27 November 2018. The new shares under the Entitlement Offer will be issued on 30 November 2018, and these new shares will start trading on ASX from 3 December 2018.
In the recently announced FY 2019 guidance of Webjet, the company announced that it is on track to deliver minimum A$110m underlying EBITDA for the existing businesses for FY 2019. In addition, based on the current AUD/USD exchange rate, the company is expecting the proforma EBITDA for the DOTW business for FY 2019 will be at least A$23 million. Assuming an acquisition close of 22 November 2018, Webjet expects DOTW to contribute incremental EBITDA of at least AUD$10m for FY 2019, pre-synergies. Webjet is expecting that the acquisition of DOTW is going to generate incremental cost and revenue synergies which include anticipated cost synergies of AUD$4m per annum and revenue synergies related to the distribution of WebBeds and DOTW’s unique directly contract hotel inventory through the various WebBeds platforms of A$10m per annum.
In the last six months, the share price of the company increased by 4.91 percent as on 9 November 2018, traded at a PE Ratio of 34.400x. WEB’s shares traded at $12.100 with a market capitalization of circa $1.49 billion as on 12 November 2018 (AEST 4:00 PM).
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