Google AI fears boost Helloworld’s $353m Webjet takeover push

The travel booking landscape is shifting as Google’s AI technology threatens to sideline online travel agencies, making Helloworld’s $353m Webjet bid more timely. Picture: iStock

Google’s announcement that it would create new AI-powered features in its search capabilities for travel bookings has sent share prices of listed travel stocks tumbling this week.

But ironically, the announcement may be good news for Helloworld, which is trying to buy its online rival Webjet.

There’s a view in the market that Google’s AI changes could mean game over for online travel websites, or make them less important at the very least.

It’s sentiment that has sent US travel stocks lower since the announcement, with Expedia down 9.5 per cent in two days.

And it is why many now think Webjet should be biting Helloworld’s hand off with its 90c a share offer, when previously it appeared to be giving its travel rival the cold shoulder.

The offer, a 19 per cent increase from the 75.5c closing price on Tuesday, values the business at $353m.

It also comes after a Webjet profit downgrade last week.

Helloworld could be snatching victory from the jaws of defeat, but a big deciding factor could be whether activist shareholder Gary Weiss, who with his business interests, Ariadne Australia, and BGH Capital, control 17.75 per cent of the stock combined, support the deal.

Dr Weiss declined to comment on whether the deal would have his support.

Earlier there were suggestions that Helloworld and BGH Capital could ultimately join forces to see the two travel companies combine and potentially get taken private.

BGH and Ariadne were buying in when shares were 60c each so would make a 50 per cent gain on their investment if they backed the offer.

The pair have nominated Dr Weiss’ son, Daniel, and Andrew Taylor for election onto the Webjet board, to be voted on at a November 21 extraordinary general meeting.

Webjet, advised by UBS, has granted due diligence to the Andrew Burnes-run travel agency Helloworld following its proposal.

The offer was announced as Webjet Group reported a 1 per cent decline in revenue for the six months to September 30 to $67.9m, and underlying earnings before interest, tax, depreciation and amortisation of $14.4m, down 9 per cent and underlying net profit of $7.8m, up 16 per cent.

Statutory net profit is up 51 per cent to $6.2m.

BGH and Ariadne had earlier put forward a takeover bid to buy Webjet at 80c a share, which the target rejected.

Mr Burnes had spoken with Webjet about a possible deal in the past, but was swiftly rebuffed.

The former Liberal Party treasurer has strong Melbourne-based business relationships, where BGH is based.

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

Market experts say that the $286m Helloworld would likely see benefits for its travel agencies owning Webjet Group, providing an online booking platform.

Webjet Group, which was split from its corporate business, now WEB Travel Group, faces industry headwinds other than AI disruption, 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 level of consumer spending following the global pandemic has eased as the higher cost of living takes its toll.

The Webjet offer comes after overseas reports suggesting the Australian-listed travel group Flight Centre is exploring a buyout of online travel agency Iglu in the UK for $202m.