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Date : 07/02/2023

Flight Centre Travel Group (ASX: FLT) shares Surge after Acquiring UK-based luxury Travel Brand Scott Dunn

Following the announcement of an M&A deal that cost $211 million, FLT shares are now under the limelight. As the company announced this acquisition yesterday, FLT shares entered a trading halt.

Flight Centre Travel Group (ASX: FLT) is an ASX-listed travel company. It is a full-service travel agency that provides a wide range of travel services, including corporate travel, leisure travel, and travel technology solutions.

The company operates in multiple countries, including Australia, New Zealand, Canada, South Africa, the United Kingdom, and the United States. FLT is one of the largest travel agency companies in the world and has a strong reputation for providing high-quality travel services to customers.

ASX: FLT HY23 Outlook

FLT share price is currently at $17.08. Flight Centre shares surge by 18% since the market closed on the 30th of December, making it one of the best performers in 2023.

ASX-FLT Shares Analysis

For the First Half of 2023, the company is expecting:

  1. Revenue: AUD 1 billion
  2. Total Transaction Value (TTV): AUD 9.9 billion
  3. Underlying EBITDA: AUD$95 million
  4. Market Capitalization: Approximately AUD 3.43 billion

FLT Shares on Trading Halt after Announcing Acquisition

Following the news of Scott Dunn acquisition, a premium travel firm located in the United Kingdom, trading in Flight Centre shares was halted.

The CEO of Flight Centre, Graham Turner, made a statement on the purchase yesterday, saying, “High-net-worth, time-poor clientele significantly appreciate the services of Scott Dunn as indicated by their loyalty.”

As part of the deal to acquire Scott Dunn, Flight Centre will fork up a total of $211 million, with $40 million coming in cash and the remaining $180 million coming via a placement. About 12.3 million additional FLT shares were issued for $14.60 per share as part of this placement.

FLT: The purpose of the UK acquisition?

It purchases a prominent UK-based luxury travel business for a total of $211 million.

Having a “well-regarded, scalable brand” backed by Flight Centre’s international infrastructure is a great way to enter the high-end travel industry in the United Kingdom and the United States.

According to the ASX travel share, the company would have seen a boost to profit/EPS in the mid-teens if it had acquired Scott Dunn for the full 12 months ending the 30th of June 2023.

FLT: How is Flight Centre financing this?

After the spread of the COVID-19 outbreak, few travel companies have $200 million in spare cash.

The Flight Centre is attempting to raise cash right now. First, it will use the money from a fully underwritten A$180 million institutional placement & the A$40 million cash already sitting on Flight Centre’s balance sheet.

A further A$40 million might be raised via the purchase of FLT shares by individual investors.

FLT: Remarks from Management

Graham Turner, MD of Flight Centre, stated:

By acquiring Scott Dunn, we can accelerate our goal of creating a worldwide premium portfolio of travel brands while expanding our footprint in the leisure sector of the huge UK and US luxury markets. Scott Dunn has a dedicated clientele comprised mostly of affluent individuals strapped for time.

Conclusion:

After the news of acquiring UK-based luxury travel brand Scott Dunn, what’s the analysis on Flight Centre Travel Group? Should you buy ASX FLT shares?

Flight Centre seems to have made a wise decision since the transaction will increase earnings per share. Given the recent uptick in demand for travel, the FLT share price might be one to keep an eye on.

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