BGH Capital and Helloworld expected to join forces for a play at Webjet

Helloworld managing director Andrew Burnes is the former treasurer of the national branch of the Liberal Party. Picture: AAP

Speculation is mounting the end game for Webjet Group is that the Andrew Burnes-led Helloworld and BGH Capital ultimately join forces to see the two travel companies combine and potentially get taken private.

Helloworld on Friday was in the market buying more shares in its listed travel rival, Webjet Group, at 89c each, and is understood to have secured a stake of close to 10 per cent.

BGH, together with Gary Weiss and his business interests, have collected a 10.76 per cent holding and have put forward an 80c-a-share takeover bid that the UBS-advised company rejects.

Sources said that Mr Burnes had a brief and informal telephone conversation with Webjet about a possible deal in recent days, but was swiftly rebuffed.

However, well-connected sources said that Mr Burnes, who is Helloworld’s managing director and a former treasurer of the Liberal Party, had strong Melbourne-based business relationships – and given that was where BGH was based, a deal involving both parties in which Helloworld and Webjet Group came together, made sense.

Private equity firm BGH Capital is run by ex-TPG Capital operatives Ben Gray and Simon Harle, and ex-Macquarie Capital boss Robin Bishop.

If Helloworld is working in concert with BGH, under ASX rule the parties would have to declare the relationship as they would collectively own more than 20 per cent.

The rules say a party cannot own more than 19.9 per cent of a business without making a buyout approach, but BGH has already bid for the company.

Market experts say that Helloworld would likely see benefits for its travel agencies owning Webjet Group, providing an online booking platform, yet it may not be in a position to afford a buyout proposal.

Eventually, it has emerged that the two groups are working together.

Helloworld’s market value is $256m and Webjet’s about $350m.

Webjet Group, which was split from its corporate business, now WEB Travel Group, faces industry headwinds in that it charges customers a fee for online consumer travel bookings.

Airlines like Qantas and Jetstar don’t, which makes using the websites of the airlines cheaper.

Compounding this is that the big level of consumer spending following the global pandemic has eased as the higher cost of living takes its toll.

Most analysts have a higher target price on Webjet than 80c a share – some believe it is worth about $1.20 per share – but broadly, the analyst consensus estimates are that the earnings before interest, tax, depreciation and amortisation forecasts of the Katrina Barry-led company out to 2030 are about 30 per cent lower.

The analysts believe that investment in areas of the company such as its brand refresh will have some benefit to earnings.

The company that has a March 31 year end is also highly cash generative and was in a $100.7m net cash position in September.

Webjet reports its full-year results this week and its shares are trading at 90.5c.

BGH, advised by Macquarie Capital, had earlier said the transaction structure for its proposal which valued the company at $314m, was still under consideration.

However, it intended to seek a controlling interest in the company and was open to some shareholders retaining an ongoing equity interest, with the potential for ongoing access to liquidity by retaining the company’s public listing, subject to appropriate tax and legal considerations.

Webjet recently laid out its five-year growth plan, and intends to double total transaction value by the 2030 financial year to at least $3.2bn.

BGH itself holds 5.89 per cent of Webjet.

Helloworld also has a small stake in Corporate Travel Management.