From the man­ag­ing ed­i­tor

Travel Bulletin - - CONTENTS - Bruce Piper

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.

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