Australian travel retailer Flight Centre Travel Group (ASX:FLT) has entered into a binding agreement to acquire 100% of the UK-based travel business Luxury Travel Holdings (Scott Dunn) for $211 million.
Flight Centre reports the acquisition will be funded through a fully underwritten $180 million institutional placement, and $40 million of existing cash on the company’s balance sheet, prior to the receipt of any funds raised under the share purchase plan (SPP).
Eligible shareholders will be offered the ability to participate in an non-underwritten SPP to raise up to a further $40 million.
Flight Centre also reports this acquisition will allow it to diversify its northern hemisphere leisure footprint, which aligns with the company’s strategic objectives of expanding in its core markets, and developing a global luxury collection of travel brands.
“The business ticks the main boxes that we have defined to play in the luxury segment”
It is expected this transaction will provide Flight Centre with an entry point into the UK, and US luxury market; expand the company’s presence in the luxury segment while fast-tracking its plan to create a luxury collection of travel brands; as well as add Scott Dunn’s ‘high-value’ customer base to the Flight Centre portfolio.
This transaction is also expected to be mid-teens percentage earnings per share (EPS) accretive pro-forma for a full year of ownership prior to the realisation of synergies, and the impact of one-off transaction cost. Flight Centre anticipates the acquisition will generate modest net corporate cost and supplier synergies.
Commenting on the binding agreement, Flight Centre Travel Group Managing Director Graham Turner says: “We are very excited to welcome the Scott Dunn team to Flight Centre. The business has a very strong and experienced management team, headed by CEO (Chief Executive Officer) Sonia Davies, who have built a global leader in the luxury travel segment, and will continue to run Scott Dunn as a separate business unit.
Scott Dunn provides us with the opportunity to grow our leisure presence in the large UK and US luxury markets in an attractive and growing segment, while also fast-tracking our objective of developing a global luxury collection of travel brands. High-net-worth, time-poor customers highly value the services of Scott Dunn as shown by their customers’ loyalty.
The business ticks the main boxes that we have defined to play in the luxury segment: exceptional service/high-quality, an authentic brand with desired benefits, it has a prestigious image, commands a premium price and is capable of inspiring deep connections with customers.
FLT (Flight Centre) is well-positioned to help Scott Dunn achieve its strategic objectives and unlock a new era of growth.”
Also commenting on the acquisition, Scott Dunn Chief Executive Officer Sonia Davies says: We are proud of how strong the Scott Dunn brand has become in the Uk and now in the US and Singapore and of our commitments to being a responsible business.
We’re excited to now continue our journey and accelerate our growth with the Flight Centre Travel Group.”
Flight Centre reports the completion of the acquisition is not subject to any conditions, and is expected to take place prior to the end of February. The SPP is also expected to be made available to eligible shareholders on or around 9 February 2023.
Flight Centre Travel Group is Brisbane-based travel retailer that operates in Australia, New Zealand, the Americas, the UK, South Africa, the UAE, and Asia.
Brands held by the group include Flight Centre, Flight Centre Business Travel, Liberty Travel, Topdeck, Travelsmart, BYOjet, and Back-Roads Touring.
Scott Dunn is a UK-based ‘high-margin’ leisure business that specialises in tailor-made, luxury holiday packages. The company offers luxury holiday packages to destinations around the globe. The company also offers the Scott Dunn Private service, which caters to the needs and requirements of ‘high-net-worth’ customers.