Flight Centre announces $A148 million purchase
Just when we thought Stella and Qantas were the only companies buying agencies, Flight Centre has announced its biggest deal so far, a $US135 million [$A148 million)] deal for Liberty Travel, one of the largest travel agency groups in the US.
Flight Centre said yesterday it would raise $100 million through a share placement to pay for the Liberty Travel network, which has 193 shops mainly in the northeast, Chicago and Florida and 40 wholesale locations around the country.
The market reacted negatively to the deal though, even though it is likely to turn Flight Centre’s loss making US operations into a profitable business with Flight Centre shares falling 8.2% to finish at $24.99 yesterday.
Managing director Graham Turner said that the North American expansion was “very significant”, noting Liberty has an affluent client base less likely to to book online or be affected by a recession.
He addd, “The acquisition is directly aligned with Flight Centre’s strategic goals for growth and fast-tracks the business evolution in this key market, as it would have taken years of organic growth and major financial investment to achieve Liberty Travel’s results, size and market penetration”.
Privately owned Liberty was founded in 1951, with now more than two million customers a year generating more than $US2 billion in transactions.
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