Webjet chief tells why he is snapping up Zuji for $25 million
Thursday, December 13, 2012/
Webjet has agreed to buy online travel agency Zuji Australia, Hong Kong and Singapore for $US25 million ($A23.7m).
The deal involves buying the assets under the Zuji banner that were under the Travelocity group, the Zuji business in Hong Kong, Singapore and Australia Zuji’s joint venture with Virgin Australia’s Blue Holidays.
Zuji has total transaction values of over $300 million and is a subsidiary of Travelocity.com, which is owned by Sabre Holdings.
Webjet managing director John Guscic told SmartCompany the deal represented a unique opportunity to substantially expand Webjet’s marketing footprint, particularly in Asia.
“We’ve known Zuji since its inception and we know they’ve built out a very attractive business in Asia and we have a desire to expand into the Asian markets and Zuji has given us the platform to achieve that,” he says.
“There are three components that we think about when formulating which direction for the organisation and one is geographic expansion, and Zuji fits within that. This broadens our footprint and gives us a market-leading position beyond our home in Australia and NZ.”
Guscic says once the deal gets regulatory approval he will focus on growing the business and integrating it into Zuji’s business.
He plans to fast-track the development of Webjet’s global hotel contracting and online hotel distribution strategies and says there are “substantial synergies” available with Webjet’s hotel aggregation model and its Lots of Hotels B2B business in the Middle East.
He says at this stage Webjet is not planning any further acquisitions.
“We would want to bed this one down before we take anything else on board – at the moment, our hands are full,” Guscic says.
Travelocity global president Carl Sparks described Zuji as “an attractive proposition” for Webjet thanks to “the strength of the Zuji brand and business” across the Asia Pacific region.
“We believe that this is the best option for future success of the Zuji business, its employees and customers”, he said.
The deal is subject to regulatory approvals so is expected to be completed early next year.
It will be funded by a placement of approximately 6.9 million new Webjet ordinary shares to raise $25 million of additional capital and is being fully underwritten and managed by Credit Suisse.
The placement is being offered to institutional and sophisticated investors in certain jurisdictions at a fixed price of $3.60 per share, which represents a 6% discount to Webjet’s closing share price on December 11, 2012 of $3.83.
New shares issued under the placement will rank equally with existing shares.
In addition, during January 2013, a non-underwritten Share Purchase Plan will be offered to eligible shareholders who will be invited to subscribe for up to $15,000 worth of shares each, subject to a maximum cap on the Shareholder Purchase Plan of $5 million.
Webjet’s shares are in a trading halt pending completion of the placement.