US-based travel booking giant Expedia has launched a $3.30 a share bid for Wotif南京夜网 Holdings in a deal valuing the company at $703 million.
Wotif, founded by entrepreneur Graeme Wood, said if the scheme is implemented shareholders will receive $3.06 a share and a 24c special dividend representing a 30.7 per cent premium to the volume weighted average price of its shares in the previous five trading days.
The deal has already received the support of shareholders representing 35.7 per cent of Wotif shares.
Mr Wood and other Wotif directors who control 20.2 per cent of the company’s shares have recommended the scheme in the absence of a superior proposal.
Mr Wood owns a 19.7 per cent stake in the company valuing his share at $138 million.
The company’s second largest shareholder, Andrew Brice, who owns a 15.5 per cent stake, will also sell his shares to Expedia as part of the deal.
“As a board we have carefully assessed the changing dynamics of the markets in which we operate and the uncertainties and risks that we would face if we were to continue as an independent company,” said Wotif chairman Dick McIlwain.
“With that in mind we believe that shareholder value will be maximised and that Wotif Group will be best positioned for the future, through the proposed transaction.”
Wotif has suffered a tough 12 months, with its shares down 42 per cent over the period due to increased competition in the Australasian hotel market.
There have also been concerns over the fact that Wotif has been forced to spend more on marketing and technology to compete with its larger rivals, at the expense of its margins.
Wotif on Monday said it expected full-year revenue of $149 million, EBITDA of $71 million, net profit of $43 million and earnings per share of 20c.
The company will release its full-year financial results in mid-August.
The Australian Financial Review’s Street Talk column revealed in April that Wotif had hired Goldman Sachs as its defence adviser and suggested it would attract takeover interest given it charges lower commissions than most of its rivals, meaning an acquirer could boost returns by raising the rates.
David Paradice of 2.3 per cent shareholder Paradice Investment Management said Expedia had offered a “big premium” and the offer was “probably not a bad idea” if Graeme Wood thought it was “good value”.
Mr Paradice said there were “a lot of uncertainties” affecting Wotif南京夜网, and an offer from Expedia was “always on the cards” as it expanded into Australia and the Asia-Pacific. “The upside must be pretty high for them.”
Ord Minnett analyst Nicholas McGarrigle said the offer “looked reasonable”, given his $3.11 target price on the stock and the industry’s “competitive conditions”. Wotif last traded at $2.64.
“The market is getting saturated” with offshore brands entering Australia, he said, attracted by the high number of Australians travelling overseas as well as the broader Asia Pacific.
These brands, such as Expedia and Booking南京夜网, have offshore inventory and are big on packages and Europe, whereas Wotif had “not captured some of that international market”.
This story Administrator ready to work first appeared on Nanjing Night Net.