Corporate Travel Management could buy more: Macquarie
Analysts at Macquarie are bullish about Corporate Travel Management‘s latest acquisition, adding that the company’s equity raising will provide balance sheet flexibility and opens up the possibility of future acquisitions.
On Tuesday the corporate travel agency announced that it would purchase US-based Travel & Transport group for US$200m ($282m), funded by a $375m equity raising.
In a note, Macquarie analysts said the acquisition was “strategically sound” as Travel & Transport‘s presence is concentrated on the US’s east coast, while Corporate Travel Management’s current US present is concentrated on the west coast and in the mid-west.
Additionally, Travel & Transport‘s customer base is focused on professional services and healthcare clients, which the analysts say is under-represented in Corporate Travel Management’s US presence.
The analysts also said with the remaining $127m from the raising that was not used to fund the acquisition and an uncommitted $182m debt facility, Corporate Travel Management could make future acquisitions as the industry is “ripe for consolidation.”
“Covid19 continues to have a material impact on corporate travel, with Corporate Travel Management (CTD) currently tracking at about 20 per cent of pre-Covid levels despite domestic travel comprising about 60 per cent of the group,” they wrote.
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