Solutions Network with Key Indian Acquisition
Flight Centre Limited has agreed to acquire a majority stake in India’s largest nationally owned corporate travel business.
The company today secured another key link in the development of its global FCm Travel Solutions corporate travel management network with the acquisition of a majority holding in Friends Globe Travels Ltd (FGTL).
The acquisition gives FCm Travel Solutions a strong network in the key Asia-Pacific region. This network now covers the corporate travel hubs of Australia, New Zealand, Hong Kong, India, China (joint venture) and Singapore (licensing agreement).
Further expansion is planned, as the company proactively pursues strategic acquisition, joint venture and licensing opportunities in key global corporate travel markets.
Flight Centre Limited managing director Graham Turner said the acquisition would give Flight Centre Limited and FCm Travel Solutions:
- A profitable business with growth potential, strong customer relationships and a customer list dominated by leading global corporations
- A significant presence in a key corporate travel market
- Opportunity to secure new global and regional business travel accounts
- Increased ability to service existing clients with interests in India and in Asia.
“Friends Globe Travels is a successful business headed by a strong management team with an excellent understanding of the local, regional and global corporate markets,” he said.
“The business has strong internal systems, particularly in cash management and client relationship management, a replicable model and a reputation for quality and service.
“The addition of FGTL will deliver tangible benefits to FCm Travel Solutions’ clients.”
Deal Structure
Flight Centre Limited will initially acquire 51% of FGTL. Agreements are in place for Flight Centre Limited to acquire the remaining 49% from managing director Rahul Nath at a price that will be determined according to the business’s performance over the next five years. Mr Nath and his leadership team will continue to run the business in India.
The purchase of the initial 51% is likely to be completed in April 2005, subject to several conditions, including Flight Centre Limited obtaining foreign investment approval from the Indian government and the consent of FGTL’s financiers to the acquisition.
The deal will be earnings per share positive and will be funded from cash reserves. Subject to final audited EBITDA, Flight Centre Limited will invest about $8.3 million for the initial 51%. Future payments depend on growth in FGTL’s EBITDA over five years.
Friends Globe Travels is expected to generate total transaction value of $107 million and EBITDA of about $3.2 million for the Indian fiscal year ending March 31, 2005.
FCm Travel Solutions global executive general manager Anthony Grigson said the acquisition represented another important step in the brand’s development as a superior global force in strategic corporate travel management.
“India is an increasingly attractive foreign investment location with numerous multinational corporations moving into the region,” he said.
“There are real opportunities to build on FGTL’s record of success because the business will now share the benefits of FCm Travel Solutions’ strong international network, brand name and advanced operational solutions. There are powerful mutual benefits.”
About FCm Travel Solutions: FCm Travel Solutions is the first Asia-Pacific based global travel management network. The brand was created by Flight Centre Limited and has grown internationally through strategic acquisitions, joint ventures and licensing agreements.
About Friends Globe Travels Ltd: FGTL was formed in 1987 and currently has branches in Delhi, Chennai, Mumbai, Gurgaon, Hyderabad and Bangalore. The business will this month expand into Kolkata, Ahmedabad, Pune and Baroda. Management plans to operate from 20 locations by the end of 2006.