From the managing editor
As predicted in last month’s travel bulletin, Andrew Burnes has made his move on Helloworld. The proposed merger with AOT has been well-received – not least because Burnes and his wife Cinzia will end up holding 40% of the combined company, giving them significant skin in the game unlike several previous senior executives and board members. The AOT owners’ strong industry experience and expertise is also likely to stand them in good stead when it comes to making big decisions at Helloworld, and it will be interesting to see whether big changes ensue. At the Helloworld owner-managers conference in late November Burnes also flagged an initiative which would encourage franchisees of the group to take shares in the business. While this will be attractive to the membership, some with longer memories may be wary, given that they were former Harvey World Travel shareholders who saw the value of their stakes decimated when the company was the subject of successive takeover bids culminating in the Mfs/octaviar debacle some years ago. However as the industry evolves it can’t hurt for travel agents to have a piece of the head office action. Indeed that is the model touted by such rival groups as Travellers Choice and Magellan, which operate under a structure of “member-shareholders”. In Helloworld’s case of course there are other shareholders including large institutions and investors, but in principle it is not a bad thing to align the interests of head office with those of the franchisees, particularly where Helloworld’s omni-channel strategy has seen the launch and heavy promotion of its helloworld.com.au online offering. The proposed merger agreement between Helloworld and AOT looks to be pretty sweet for the Burnes’. They will receive $25 million in cash while about 220 million new shares will be issued to boost their stake to 40%, valuing the AOT Group at close to $100 million. Keen observers will note that the deal sees Helloworld buying back the ATS Pacific business it sold to AOT Group two years ago, incurring a loss of as much as $7 million. The merger will also see the dilution of the stakes of existing shareholders by about a third, something which must be particularly irksome to some. Although it looks to be a done deal, Helloworld’s acquisition of AOT is still subject to shareholder approval at an upcoming Extraordinary General Meeting, while an information memorandum on the transaction will also include an Independent Expert’s Report which is certain to be fascinating reading.