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TD breaking news – Helloworld-AOT deal “not fair but reasonable”

Independent expert recommends merger as in best interests of HLO shareholders. 

The advantages of the proposed merger between Helloworld Limited and the AOT Group outweigh the deal’s disadvantages, despite an Independent Expert’s Report from consulting firm Grant Thornton concluding that it will reduce the value per Helloworld share, according to a 175-page document just released by the company’s board.

The Notice of Meeting and Explanatory Memorandum about the merger proposal has been issued to inform shareholders in the lead-up to a meeting to vote on the proposal which is scheduled for 10am Sydney time on Friday 22nd January 2016.

The merger will combine AOT and Helloworld, with AOT owners Andrew and Cinzia Burnes holding 40% of the overall business which which will be a “leading integrated travel group in the Australian market offering a broad range of travel products and services.

“The integration of the two businesses is expected to increase the scale and earnings of the enlarged Helloworld Group, allowing it to better compete with larger participants in the retail, wholesale and corporate travel industry and with global online competitors,” a letter to shareholders reads.

Advantages of the deal touted include increased scale, positioning the group for future growth, cost savings and securing a new CEO for Helloworld. Tthe Independent Expert has concluded that it is “not fair but reasonable and in the best interests of non-associated Helloworld shareholders”.

Figures in the report indicate that AOT recorded $368 million in TTV for 2014/15 with revenue of $54.3 million and pre-tax earnings of $14.3 million. If the merger proposal is implemented Andrew Burnes will be appointed as the company’s CEO and Cinzia Burnes will become an Executive Director. Andrew Burnes will be entitled to a $475,000 annual remuneration package.

The enlarged group will have an estimated annual TTV of $5 billion, and if the merger proposal does not proceed Helloworld has agreed to pay the AOT vendors a “Break Fee” of $500,000. The report also confirms that almost 50% of AOT’s wholesale TTV is in relation to travel products sold via the Helloworld wholesale and franchisee networks.

Estimated cost savings of $7.6 million annually can be achieved by 30th June 2017 by combining the two businesses. the report adds.

More details in today’s issue of Travel Daily.


The above Breaking News Alert was sent to Travel Daily subscribers on 18 Dec 15

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