Listed travel company Jetset Travelworld and private equity-backed company Stella Travel Service have agreed to a $440 million merger designed to help the two companies remain strong in Australia’s highly competitive travel sector.
The merger, announced to the Australian Stock Exchange yesterday, will see the creation of a company with 3,000 employees and operations split 60/40 between the retail and wholesale sectors.
Stella will receive $220 million worth of shares in Jetset, while the newly-merged business will take on $40 million worth of Stella’s debt.
The company will remain listed on the ASX.
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Jetset chairman Tom Dery described the merger as the combining of two complementary businesses.
“Both Jetset and Stella have emerged strongly through recent years and this transaction creates an opportunity to build a business of genuine scale, providing long-term benefits and stability for the merged entity’s franchisees and members, staff, suppliers and other trading partners.”
Jetset shareholders will get their chance to vote on the deal at a general meeting on August 31.
While Jetset says its 58% shareholder Qantas has agreed to support the deal, it is not clear whether the company’s other major shareholder, former Rich 200 members Spiros Alysandratos, will also vote in favour.
“He’s very supportive of the deal but before he makes a financial decision he wants to see the independent experts report and the explanatory memorandum before making a final decision,” Dery told SmartCompany.
Alysandratos currently holds a 24.7% stake in Jetset, but this would fall to 12.6% under the terms of the merger.
Alysandratos was last listed on BRW’s Rich 200 in 2008 with a fortune of $217 million. He is also the owner of Consolidated Travel, which provides about 4,000 travel agents with ticketing and other services.
He departed the Rich 200 last year after shares in Jetset plunged during the GFC.
Jetset shares have fallen from around $3.30 in February 2008 to around $1.10.