The process has begun to break into the global luxury travel market, with Australian travel booking company Flight Centre [ASX:FLT] having released its statement of intention to acquire Scott Dunn, an award-winning UK luxury travel brand.
The enterprise value of the UK company has been tallied at £121 million (AU$211 million). It will mean FLT will have to partake in an AU$180 million equity raising to fund the transaction.
FLT shares went up 1% before the stock was halted, paused at the value of $15.83 per share.
Share returns have slipped more than 4% for FLT over the course of the full year. Even so, FLT is up more than 9% so far for the first month of 2023.
Source: tradingview.com
Flight Centre’s UK transaction
This morning, Flight Centre announced the bold move that would allow it to add a luxury string to its travel service bow in claiming 100% of Scott Dunn, a leading UK-based luxury travel brand with an enterprise value of AU$211 million.
Acquiring Scott Dunn will enable FLT to enter the global luxury travel space by harnessing a company that is centred on designing unique luxury travel experiences throughout the UK, US, and Singapore.
Flight Centre said that an entry point into the UK and US luxury travel market would be channelled through a ‘well-regarded, scalable brand’ which will support FLT’s global platform.
However, This entry point does not come cheap, with the transaction calling upon FLT to raise extra funds via an AU$180 million equity raising.
Flight Centre already has AU$40 million of existing cash on its balance sheet that will go towards the purchase, but it will be up to its investors to close that gap.
The fully underwritten AU$180 million institutional placement will take part outside an additional Share Purchase Plan, in which eligible existing shareholders will be offered to participate in an additional non-underwritten share purchase plan for a further AU$40 million.
The acquisition is slated for completion by the end of February and is not subject to any conditions.
FLT: Business and the promise of luxury
FLT said that it expects preliminary unaudited 1H23 results of group TTV to reach A$9.9 billion, group revenue of AU$1.0 billion and underlying group EBITDA of A$95 million.
The travel company presented guidance in the range of AU$250–280 million for underlying group EBITDA in FY23 prior to the benefits of the acquisition.
Flight Centre said its acquisition of Dunn Scott is expected to generate modest net corporate cost and supplier synergies.
The travel group looks forward to diversifying its northern hemisphere leisure footprint, as well as the ability to expand into core markets with a new global luxury collection of travel brands.
The luxury market has been noted as historically resilient through challenging macroeconomic periods and is expected to offer not only broader opportunities for market and capital but also a foundation for security in uncertain times.
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Regards,
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For Money Morning
