US-based companies Travel and Transport and AAA Travel are being tipped as Corporate Travel Management’s most likely acquisition targets, according to analysts.
Corporate Travel remained in a trading halt Monday ahead of an announced acquisition and equity raising Tuesday.
It is understood that the acquisition target is in the United States and has a total transaction fares value (TTV) of about $4bn.
On this basis, sources say that the deal is likely to be worth between $500m and $1bn and can most likely be only be one of two targets — AAA Corporate Travel or Travel and Transport.
Travel and Transport is a corporate travel company based in Omaha, while AAA Corporate Travel is based in Ohio.
The Australian listed Corporate Travel Management will launch a $400 million equity raising on Tuesday to fund the acquisition with assistance from Morgan Stanley and Morgans.
It is understood details surrounding the transaction, including the price of the raise, were still being finalised Monday.
Fund managers were understood to have been sounded out about the deal on Friday.
The company said in a statement Monday that the raise would include an entitlement offer.
“The trading halt is requested as the company is considering, planning for, and expecting to announce, a capital raising comprising an underwritten pro rata accelerated entitlement offer of fully paid ordinary shares in the company and an acquisition,” the company said in a statement to the market.
The global company has fared better than its competitors in the Australian travel industry and had earlier told investors it was in search of acquisition opportunities in North America.
In August, The Australian reported that its European, Australian and New Zealand operations were breaking even in July.
During COVID-19, its main business has been corporate charters, car hire and government work, with the bulk of ITS global business — some 80 per cent — in Europe, the UK and North America.
For the 2020 financial year, Corporate Travel Management reported an underlying net profit of $32m, but taking into account COVID-19 related costs, it posted a statutory net loss of $10.6m, down 112 per cent on the previous year’s $120.9m profit.
It did not declare a dividend for the full year.
Globally, total transaction values declined 29 per cent but managing director Jamie Pherous said industry consolidation was likely in the present environment and said the company remained open to considering potential acquisitions.
Mr Pherous in August said that despite more than 1000 staff redundancies, costing $15.1m in redundancy payments, the company had retained 97 per cent of its corporate travel clients since the start of the pandemic.
The company reported zero debt and had an undrawn facility of $180m.
It would focus more on domestic travel, meaning intra-country travel, for the rest of the year.
China energy bid switched off
Aspirations by China’s State Grid to buy Jemena are understood to have put an end to a possible sale of the energy business.
Healthscope firmly in the sights of Bain
Bain Capital is closing in on its next big target struggling with too much debt – the country’s second-largest hospital operator Healthscope.