Travel Agents

Corporate Travel Management emerges from trading halt with big acquisition

Corporate Travel Management (CTM) has entered into a binding agreement to acquire a US travel management company for US$200.4 million ($274.5 million).

After announcing a trading halt on the Australian Securities Exchange (ASX) yesterday morning, CTM emerged today with news of its acquisition of Travel & Transport, which is based in Omaha, Nebraska.

The company, which was founded in 1946 and also has a European presence, generated US$2.8 billion ($4 billion) in total transaction value during the 2019 calendar year, 60 per cent of which was from corporate air travel, and 30 per cent of which was from hotels.

In its announcement on the ASX this morning, CTM said Travel & Transport’s customer mix is “highly complementary” to its offering, with a focus on professional services and healthcare clients.

Travel & Transport also owns Radius Travel, which operates a large-scale hotel program with a number of prominent brands across 160 countries.

CTM will fund the acquisition via a fully underwritten entitlement offer to raise $375 million.

The entitlement offer will result in approximately 27 million new shares being issued in total, equivalent to approximately a quarter of CTM’s total shares outstanding upon completion of the offer.

All of CTM’s non-executive directors have indicated that they will participate in the entitlement offer. However, company founder and managing director Jamie Pherous (pictured above) has indicated that he won’t participate.

Additional capital is also being raised by CTM to fund acquisition costs, integration costs, provide additional liquidity to fund potential Travel & Transport losses for a prolonged period, balance sheet flexibility, and provide capacity for other acquisitions.

The acquisition is expected to be completed in late October, and is subject to, amongst other things, antitrust approval and the receipt of a satisfactory fairness opinion by the trustee of Travel & Transport’s employee stock ownership plan.

While the acquisition of Travel & Transport is likely to represent a significant change to the scale of CTM’s activities, the ASX has confirmed that the company is not required to obtain shareholder approval for the transaction.

Kevin O’Malley, who is the incumbent CEO of Travel & Transport, will lead the combined entity once the deal is done. O’Malley, along with other key Travel & Transport executives will also invest in CTM shares.

Commenting on the acquisition, Pherous said: “We are excited to bring our two companies together under the CTM umbrella.

“Travel & Transport has an incredible reputation and a long history of success within the global travel industry, and we have shared views about delivering personalised service and proprietary technology to generate strong returns for clients on their travel investments.”

O’Malley said: “Travel & Transport has been in business for 74 years, growing from a one-person operation in Omaha, Nebraska, to one of the largest corporate travel management companies in the US.

“We are excited about the opportunities for our people and our clients by becoming part of a growing, world-class travel management company.

“We were very impressed with CTM’s technology, in particular the Lightning online booking tool, and CTM’s strength in the Asia-Pacific region. CTM will be a great place for our employees to call home.”

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