Corporate Travel Management (CTM, ASX: CTD) has continued its strategic expansion into the Asian market after acquiring a majority stake in Hong Kong-based Lotus Travel Group Limited (Lotus) in a deal worth $37.4 million (AUD$50 million).
The purchase of 75.1 percent of Lotus will take effect from October 2, 2018 and will result in CTM becoming the largest travel management company in Hong Kong servicing Greater China, with a combined Total Transaction Value approaching $1.87 billion (AUD$2.5bn). CTM’s partners in Asia, Ever Prestige Investments Limited (EPI), will acquire the remaining 24.9 percent through CTM Asia.
The acquisition creates optimum scale for the combined entity to leverage technology, support costs and supplier relationships across a wider base to best enhance long-term sustainable growth in the Asian region.
CTM Managing Director Jamie Pherous said the two firms had a great understanding of each other’s culture and leadership teams, which would allow for a seamless integration process.
“Lotus is a long standing and highly regarded travel leader in Hong Kong,” he said. “They meet our strict acquisition criteria and, like CTM Asia, are leaders in travel in the region and enjoy high client and staff retention.
“We are delighted to have Lotus become a key part of our Asian business. Together, we will become a leader in the Greater China market and will be well positioned to enhance our client offering, technology and expertise in this market.”
Having operated for more than 60 years, Lotus is a market leader in Hong Kong across the corporate, B2B, wholesale and MICE markets. It employs 400 staff and has offices in Hong Kong and Greater China.
Chairman and CEO of Lotus, Patrick Kong, said: “We have known the CTM Asia leadership team for many years and have watched CTM Asia build a very strong growth business based on highly personalized service delivery with best-in-class technology solutions.
“We consider that CTM is an excellent fit to enhance our service offering to both current and future clients, while providing exciting new career opportunities for our employees that comes through growth.”
The acquisition will contribute approximately $2.99 million (AUD$4m) earnings before interest, tax, depreciation and amortization (EBITDA) over nine months trading to CTM’s 2019 annual results. Mr Pherous said CTM expected to deliver FY18 results at or slightly above the top end of the previous guidance, at approximately AUD$125m (27% growth on p.c.p).
About Corporate Travel Management (CTM)
CTM is an award-winning provider of innovative and cost-effective travel management solutions to the corporate market. Its proven business strategy combines personalised service excellence with client facing technology solutions to deliver a return on investment to clients. Headquartered in Australia, the company provides local services solutions to clients in more than 70 countries.
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