Transonic Travel to strengthen leisure operations with $16.5 million acquisition

Transonic Travel Limited, a leading provider of services to the airline and travel industry, has reached agreement for the acquisition of a group of leisure businesses in USA, Australia, New Zealand and Fiji. The companies to be acquired include ATS Tours and Islands in the Sun which are based in Los Angeles and specialise in wholesale package holidays to Australia, New Zealand, Tahiti and other Pacific Islands; ATS Pacific which is an inbound tour operator based in Australia, New Zealand and Fiji; and a 50 per cent shareholding in Coral Sun which is Fiji’s largest tourism transport and service provider. 

This is Transonic’s second acquisition since listing on the Australian Stock Exchange in May 2004. In July 2004, Transonic acquired Newmans South Pacific Vacations, a significant wholesale tour operator from North America to Australia, New Zealand and the Pacific Islands.

The acquisition price of $16.5 million is being structured to maximise returns to Transonic shareholders. The vendors will receive cash of $11.5 million, 537,634 Transonic shares issued under escrow for 12 months, and a deferred payment of $3.5 million to be made in 18 months time. It is expected that the acquisition will be earnings per share positive in the current financial year and, after integration benefits, the price will represent 5.3 times 2005/2006 earnings before interest and tax.

Transonic’s CEO Peter Lacaze said: “This acquisition is in line with the group’s strategy of making bolt-on acquisitions that complement and benefit our existing operations. The Newmans South Pacific Vacations business has grown strongly since acquisition and we have similar expansion plans for the businesses we are acquiring now.”

“ATS Tours and Islands in the Sun will be integrated with our existing operations in North America. We believe this will provide us with significant cost savings and give us greater purchasing power. Transonic’s strong management team in North America are well placed to complete the integration quickly and efficiently” said Mr Lacaze.

“ATS Pacific is a new line of business for Transonic, and as an inbound tour operator, is expected to give Transonic access to the high growth inbound tourism markets of Australia, New Zealand and Fiji. Its main customers are located in UK/Europe, USA, Japan and Asia. Russell White, Managing Director and a major shareholder of ATS Pacific, will continue in his present management role, as will all the other senior managers in Australia, New Zealand and Fiji,” added Mr Lacaze.

The agreement to acquire ATS Tours, Islands in the Sun and ATS Pacific is conditional on government approvals in Fiji and completion of banking arrangements. Upon completion, expected by the end of January 2005, these companies will form part of Transonic’s Leisure division. In addition to Newmans Holidays in Australia and its North American businesses, the division includes Travel Indochina, Air New Zealand Holidays, Ski Express and Rail Tickets.