ASX-listed Flight Centre Travel Group will buy two local travel firms for an undisclosed sum, expanding its footprint in New Zealand and making it one of the country’s biggest travel management groups.
The Brisbane-based company on Monday said it had agreed to buy Travel Managers Group (TMG) and Executive Travel Group (ETG), without providing details of the transactions, making New Zealand the Australian firm’s fifth biggest business globally.
The two businesses will add $3 million of annual earnings before interest, tax, depreciation and amortisation, and Flight Centre said their addition will boost the New Zealand business to almost $1.5 billion in annual sales in the 2018 financial year.
“ETG will enhance our already strong corporate travel offering in New Zealand and will give the business additional scale and expertise,” Flight Centre managing director Graham Turner said in a statement to the ASX.
TMG provides systems and support to a network of 180 travel brokers and operates a 22-shop franchise network including 12 TravelSmart shops and 10 other non-branded stores, while ETG is New Zealand’s biggest independent corporate travel manager.
Former Flight Centre staffer Kevin Weston co-owns ETG, which was set up in 1978 and he and business partner Nicola Jamieson bought a 40 per cent stake in TMG in 2014.
Weston, Jamieson and TMG shareholder David Wallace will keep running the two businesses, and report to Flight Centre New Zealand managing director David Coombes.
Flight Centre will use company cash to pay for the acquisitions, which are expected to settle in the first quarter of the 2018 financial year. No price was disclosed, although Flight Centre said they were in line with normal multiples. The ETG purchase includes extra payments if certain earnings targets are met.
The ASX-listed company’s shares last traded at $A43.50 ($NZ46.33) and have jumped 39 per cent so far this year.
