Flight Centre Travel Group Ltd (ASX: FLT) has announced an acquisition in France designed to strengthen its position in the European corporate travel market.
About Flight Centre
Flight Centre is one of the world’s largest travel agencies and has company-owned operations in more than 23 countries, while their corporate travel management network spans more than 90 countries. The Group employs more than 19,000 people and owns 2,800 businesses.
Another Acquisition
Flight Centre announced this morning they have taken a 100% ownership stake in European corporate travel business 3Mundi. The transaction was funded via existing debt facilities but the transaction price remains confidential.
3Mundi operates in France and Switzerland and generated a total transaction value (TTV) of approximately 170 million Euros during the calendar year 2018.
Flight Centre acquired 25% of the business in June 2017 and has been working with 3Mundi since 2015. The terms for the full takeover were agreed upon when Flight Centre took its initial stake in 2017.
Flight Centre Managing Director Graham Turner highlighted the importance of France in their corporate travel business.
“France is an important business travel hub globally and is now the world’s sixth largest corporate travel market, making it a significant future growth opportunity for our company,” he said.
What Does This Mean for Flight Centre?
This deal seems like an important acquisition because the corporate travel business contributed 37% of Flight Centre’s TTV during the six months ended 31st December 2018.
Corporate travel has been a focus for Flight Centre and was also behind the decision to acquire a 25% interest in The Upside Travel Company earlier this year.
Of course, whether the acquisition of 3Mundi is a prudent investment or not would depend on the price Flight Centre paid. While this information is undisclosed, it’s hard to say whether this was a good move for the company.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
