Online travel booking agency Webjet is buying New Zealand-based vehicle rental group Online Republic for $NZ85 million ($A80 million).
The move is a strategic one for Webjet which says Online Republic enables the business to expand its offering in car rental and enter the high growth motorhome rental market.
“The acquisition of Online Republic represents a unique opportunity to leverage Webjet’s core capabilities into the attractive online car rental, cruise and motorhome segments,” says John Guscic, Webjet’s managing director.
The acquisition is being funded by a combination of shares at $A6.21 each, representing 22% of the purchase price, and by an equity capital raising of up to $A72 million.
Webjet shares last traded at $6.31 each, well ahead of a 12 month low of $2.95. The company is now in a trading halt.
The company plans to take Online Republic global. Already, 90% of bookings at Online Republic were generated outside of New Zealand.
“We see significant opportunities in applying the benefit of our marketing and branding expertise, together with our scale, to drive market share gains across Online Republic’s respective segments,” Guscic says.
“This is an exciting opportunity for Webjet, enabling us to broaden our product offering and deepen our footprint, enhancing our proposition for our customers.”
For the year to March, Online Republic generated total transaction value of $NZ229 million ($A216 million), revenue of $NZ40 million ($A38 million) and EBITDA (earnings before interest, taxes, depreciation and amortisation) of $NZ$12 million ($A11 million).
In the latest half year, Webjet reported a 27% rise in revenue to $A73.8 million. Net profit after tax was $A10.7 million, up 17.5%.