Helloworld Travel Ltd (ASX: HLO) shares are on watch this morning after the travel company announced an acquisition.
Helloworld, created in 2013, is an Australian and New Zealand travel distribution company with 2,200 staff spread across Australia, New Zealand, Fiji, the USA, Asia, India and Europe. It operates retail travel networks, corporate travel management services, destination management services, air ticket consolidation, wholesale travel services and online operations.
Helloworld’s New Acquisition
Helloworld has announced that it is acquiring TravelEdge, which is one of Australia’s largest privately-owned corporate travel management companies.
TravelEdge offers travel management solutions, academic travel services, event and group planning & delivery, holiday & leisure services and travel prizing & incentives.
The acquisition will cost Helloworld $28 million, which is being funded from a new bank loan. There could be more to pay in FY21 if earnings targets are met in FY20. The acquisition cost if approximately 6x FY19’s EBITDA (click here to learn what EBITDA means).
Helloworld CEO and Managing Director Andrew Burnes
said: “We are very pleased with the addition of TravelEdge to the Helloworld Travel Limited business.
“This will allow HLO to expand in the corporate and education travel sectors and the business complements our existing corporate operations in Australia and New Zealand with additional expertise, knowledge and capability.”
In FY19 TravelEdge generated $300 million of total transaction value (TTV) and Helloworld said its existing travel management businesses of QBT, Show Travel, Inspire, AOT Hotels and APX in New Zealand will add to a total TTV on an annualised basis of $1.55 billion in FY20.
The Helloworld Business Travel network of corporate agencies across Australia and New Zealand has a TTV of over $850 million, bringing the total corporate business for wholly owned operations to over $2.4 billion in FY20.
Before this acquisition it was priced at only 13 times the estimated earnings for 2020 according to CommSec. This looks like a good price for a growing business, but I think there are even better growth opportunities like the ones in the free report below.
[ls_content_block id=”14947″ para=”paragraphs”]
[ls_content_block id=”18380″ para=”paragraphs”]
