CTM has struck a deal to buy Omaha based Travel & Transport for a cash and debt-free enterprise value of $US200 million ($A275 million).
When synergies in the deal are taken into account, CTM believes the transaction will improve the company’s earnings per shares by about 30 per cent.
The funds raised in the offer will be used for the acquisition, integration and capital raising costs.
But CTM’s largest shareholder, Jamie Pherous, will not take part in the entitlement offer which will reduce his stake in CTM from 19.5 per cent to 15.6 per cent.
Pherous said he could not afford to take part because his income is from CTM dividends, which were scrapped because of the pandemic.
The American business generated $US2.8 billion last year and had operational earnings of $US29 million. More than 60 per cent of business was from the corporate sector and 30 per cent from hotels.
CTM said once combined the deal with strengthen the company’s position as one of the leading mid-market corporate travel managers in the world with income from all areas of the business (total transaction value) of $10.8 billion.
Pherous said CTM was excited to bring the two companies together.
“Travel and Transport has an incredible reputation and a long history of success within the global travel industry and we have shared views about delivering personalised service and proprietary technology to generate strong returns for clients on their travel entitlements,” Pherous said.
“This is everything we ever hoped for.
“We have been courting them for many, many years.
“They really are an A-grade business. We think we will be very dangerous together.”
Under the entitlement offer, eligible shareholders will be able to subscibe for one share for every 4.03 shares they hold on Thursday, October 1 at the issue price of $13.85 “a good discount to last Friday’s close” of $16.16.
That will mean CTM will have an extra 27 million shares. Morgans has underwritten the offer. All non-executive directors will participate in the offer.