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Qantas and Jetset Travelworld
are hoping to merge in a move which would create a vertically integrated travel services business.
Under the terms of the agreement, Jetset will acquire Qantas Holidays and Qantas Business Travel from Qantas in exchange for Jetset
scrip. Post transaction, Qantas will own 58% of Jetset's share capital.
The merged entity
expects to sell travel services to the total value of around $3 billion a year and generate revenues in excess of $800 million a year,
which would make it one of the top travel businesses in the region.
"This is a strategic alignment that will bring together two of the strongest brands in travel, capitalising on each business's individual
expertise enabling them, as a group, to build the scale needed to grow into a major industry force,"
said Mr Geoff Dixon, the Chief Executive Officer of Qantas.
"The merged entity will remain listed on the ASX under the Jetset brand, with the various businesses operating under their existing trading
names."
Mr Dixon said the transaction would provide significant benefits to the businesses, their customers, and shareholders as the
complementary strengths of each of the areas were harnessed in the one integrated grouping.
He added that the transaction was an extension of the Qantas Group's segmentation strategy, aimed at providing greater autonomy and
unlocking the value in its portfolio businesses.
"The transaction will create shareholder wealth and synergies will make it earnings per share positive. It will also provide a platform for
growth for both Qantas Holidays and Qantas Business Travel," Mr
Dixon said.
John King
will continue as Jetset's Chairman, with Qantas having the right to appoint four of the seven-member
Board. Peter Collins, currently Group General Manager Qantas Holidays, and Andrea Slark, currently Qantas General Manager Strategy Mergers
and Acquisitions, has been appointed to lead the combined company as Group Chief Executive Officer and Chief Financial Officer
respectively. Jetset's existing management team will continue to head up existing Jetset business units following completion of the merger.
Mr Dixon said no redundancies were planned and the employment terms and conditions of existing Qantas and Qantas Holidays employees
would be maintained.
Pending review by the Australian Competition and Consumer Commission and receipt of approval by the Foreign Investment
Review Board, the transaction was expected to be completed by 30 April 2008.
The merger will
also require approval by a majority of Jetset shareholders at a shareholders' meeting, which is expected to take place in April
2008.
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