The travel industry Christmas shopping spree continues this week with Webjet paying $25 million to Travelocity to acquire its Zuji online travel agency.
The decision to offload Zuji marks almost six years since Travelocity-parent Sabre Holdings took full control of the company from its original collaborative ownership structure of Abacus and a number of airlines in the Asia-Pacific region.
The entire business (it runs a number of sites and offices in Asia-Pacific, including India, Australia, New Zealand, Hong Kong and Singapore) will transfer to Webjet as part of the deal.
Webjet says the deal is subject to regulatory approval and will give it around AUS $300 million in total transaction value on an annual basis, based on current figures.
Motivation for acquisition at Webjet’s end is to expand its “marketing footprint” in growth markets around Asia and “substantially shape leisure distribution online to coincide with the rapidly changing structural elements of aviation in the APAC region”.
Webjet managing director John Guscic adds:
“Zuji will fast track the development of Webjet’s global hotel contracting and online hotel distribution strategies with substantial synergies available in conjunction with our hotel aggregation model and our Lots of Hotels B2B business in the Middle East.”
The deal will be funded by a placement of approximately 6.9 million new Webjet ordinary shares to raise approximately AUS $25 million of additional capital. Credit Suisse (Australia) was appointed to underwrite and manage the acquisition.
Travelocity global president, Carl Sparks, says “the strength of the Zuji brand and business across the APAC region made it an attractive proposition for Webjet and we believe that this is the best option for future success of the Zuji business, its employees and customers”.
Clearly much has changed in the six years since Travelocity took full control of the business, with talk back in 2006 concentrating on how the mothership would share its technology and experience into Zuji, as well as offer existing suppliers further exposure in to the region.
Markets singled out at the time included the giants of the region, India and China.
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From a technology standpoint this is a complicated purchase for Webjet which leads me to think it’s all about the brand. Can only think that Webjet plan to move off the current Zuji technology platform asap as the Zuji sites are essentially white labels of Lastminute.com functionality (in the main) with some other tech plugged in in some countries. Otherwise to really buy Zuji they’d have to buy a copy of the Lastminute tech (and some Travelocity tech) and, knowing that platform well, that would be an odd choice to make…
So this has to be an operations and brand purchase, which for $25m is not a bad buy anyway as Zuji has a good reputation in the countries it serves.
Too true. If they have a technical home for all that hotel inventory, have a team to fill it, and a brand and traffic to sell it….its got some good synergies.