Franchise Talk

S8 bids $196b for Gullivers Travel

May 30th, 2006 | Author: Jack

S8 yesterday launched a $NZ235 million ($196 million) takeover bid for Gullivers Travel Group after winning the support of the New Zealand company’s founder and 26.8 per cent shareholder, Andrew Bagnall.

If successful, the deal will boost S8’s coverage to 2100 travel agencies (mostly franchises) in Australia, New Zealand, South Africa and the UK. This compares with Flight Centre’s 1500-odd outlets worldwide.

The $NZ2.35 a share bid helped Gullivers shares surge NZ69c to $NZ2.36 on the NZ Stock Exchange, while S8 shares rose 5c to $4.05.

But the deal doesn’t look like a bargain. “The offer (excluding the dividends) represents a 40 per cent premium to the closing price of $NZ1.67 on [Friday],” Gullivers chairman Rob McLeod said in a media release.

It is S8’s fourth major takeover bid for a listed travel company since September, when the largely unheard of property manager confounded market observers by launching a takeover bid for Harvey World Travel.

S8 has since taken over Transonic Travel and Travelscene, and won over analysts with its strategy of consolidating the sector and using its acquisitions to fill the 5000 serviced-apartment rooms it manages in Queensland.

Analysts say another major bonus is that S8 will be less dependent on external travel wholesalers, who charge commissions.

S8 has made 31 acquisitions in four years and its share price has more than doubled in 12 months.

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