Flight Centre Travel Group (ASX:FLT) announced that it has acquired a 70% interest in Professional Performance Systems Pty Ltd (PPS), which is the parent company of a travel website named BYOjet.com.
Subsequent to its recent acquisition in the US worth $US 28 million, Flight Centre has secured a 70% interest in the BYOjet.com business. BYOjet is an online travel agency that focuses on low cost airfares and other products.
BYOjet was launched in Australia in 2010 and was expanded into New Zealand in 2012 and Singapore in 2014. The business was partially acquired by Disruptive Investment Group Limited (ASX: DVI).
Ensuing completion of the acquisition, Flight Centre will hold a 70% interest in PPS) – the parent company of BYOjet and its associated businesses. Disruptive Investment will retain its 16.4% interest in PPS and the remaining 13.6% will be held the company’s co-founder – Lenny Padowitz and his associates.
Flight Centre will initially purchase $2.52 million worth new shares in PPS and may make an additional cash payment to DVI and PPS’s founders at the end of FY16. This additional disbursement is subject to BYOjet’s business performance during the year.
Mr. Graham Turner, the Managing Director of Flight Centre, commented on the company’s acquisition strategies: “While we have strong overall market share in both the leisure and corporate travel markets in Australia and elsewhere, we see opportunities to grow more aggressively in some sections of the market that haven’t previously been priorities. The low cost airfare sector is an obvious opportunity and the investments we are making throughout our business provide further evidence of our intention to fat-track our growth and to develop stronger foundations in this space globally.”
Mr. Turner also mentioned that the company plans on developing and acquiring specialist businesses that focus on low cost models like BYOjet and enhance its ‘blended-travel’ offering and overall product range by expanding its relationships with key airline carriers.
Flight Centre last traded at $37.10 as at 3:04 pm and is up more than 13% for the year.
Author: Simon Herrmann
Dec 21, 2015
Simon is a financial analyst at independent research firm Wise-owl who wants to change the world by disrupting the cliché approach to investment decision making with convergent thinking. Wise-owl’s goal is plain and simple: Find the best opportunities for our members by following a proven methodology and to create long-term value through high-quality advice, innovation, technology and education. We combine industry experience and the agile mentality of a start-up. Wise-owl is the future of stock market investing.