20 April 2016
CTM expands US footprint with East Coast acquisition
Leading travel provider Corporate Travel Management (CTM, ASX: CTD) has bolstered its position in the North American market with the acquisition of Boston-based Travizon Travel (Travizon).
The USD21 million (AUD28 million) acquisition of 40-year-old Travizon will make CTM one of the 10 largest travel management companies in the country just four years after entering the market.
CTM Managing Director Jamie Pherous said the transaction, which followed the purchase of California-based Montrose Travel in December, would allow CTM to build and leverage scale, and is projected to take North American Total Transactional Value (TTV) “well above USD1 billion (AUD1.3 billion)” in the next financial year.
“Travizon is a long standing and well regarded corporate travel company,” Mr Pherous said.
“They meet our strict acquisition criteria, they possess a capable and passionate management team, are leaders in travel in their region, enjoy high client and staff retention, and part of the consideration will include taking ownership in CTM stock.
“This transaction is the result of years of working closely together on client programs on both sides of the Atlantic.”
Mr Pherous said both CTM and Travizon have a track record of winning and servicing high-profile global and regional clients, and use the same reservation system, which would enable the business to quickly leverage networking opportunities.
“We have fully integrated our US operations leading in to the next financial year. Already we have seen that our scale in North America allows us to leverage our sales, support services, and buying power to maximize the benefits to our clients and our business.
“We will now operate in over 20 cities across the USA; this strategic acquisition will build upon our existing presence on the East Coast.
“The global reach and network we have established benefits us not only in North America, but in other international markets, with multi-national clients seeking to partner with travel providers that have the mix of technology, scale and local expertise we can offer.”
The acquisition will be funded through a 50/50 combination of stock and cash, representing stock valued at USD10.5 million (approximately AUD14.0 million) to founders with the balance USD10.5 million (approximately AUD14.0 million) provided through a mixture of funding out of USA operating cash flow and borrowing USD denominated short term debt.
The acquisition is targeted to take effect from 1 July, 2016 and will, therefore, make no earnings contribution in FY16.
“We remain committed to an acquisition approach that is strategic; where potential additions to our business are assessed for their cultural and management fit, as well as their strategic importance and simplicity of integration,” Mr Pherous said.
“Travizon meets those criteria, with a dedicated workforce, experienced management, and a leadership team that are closely aligned with our approach of delivering superior customer service, customized solutions and a return on investment for our clients.”
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