Under-the-radar New Zealand travel booking firm Online Republic has been bought by Australian travel booking website Webjet for $85 million.
The 12-year-old Kiwi company has cruise, car rental and motorhome booking channels, with 90 per cent of its sales overseas. The acquisition will be partly funded by cash and the issuance of new Webjet shares.
"Online Republic is highly complementary to Webjet's existing portfolio, enabling our business to further expand its offering in car rental and cruise and enter the high growth motorhome rental market," managing director John Guscic said.
ASX-listed Webjet had been working with Online Republic in the cruise area for the past two years.
"We were really happy with their performance. I liked the company so much that we bought it," said Guscic.
The owners of Online Republic had in turn reinvested 22 per cent of the proceeds of the sale in shares of Webjet, he said.
Webjet is a major Australasian online travel agent and it was Online Republic's strength in cruise bookings that initially attracted the Australian firm.
Cruise was the fastest growing travel segment, said Guscic. Online Republic's structure and management would remain in place. Online Republic generated total transaction value of $229 million for the 12 months to March 31, and annual revenue of $40 million, according to Webjet.
Online Republic was founded by Mike Ballantyne and his late brother Paul, initially as a car booking site.
Mike Ballantyne, a former ad man, said the key to early success was learning about search engine optimisation.
"After being taken for a $9000 ride by an SEO [search engine optimisation] company, I bought a $40 book, Google Adwords for Dummies. I put up some ads on Google and the bookings started flowing in. Then we hired our first online marketing expert," he told the Herald in 2013.
Last year Ballantyne and his wife Jen put a slice of their earnings into a social media support project for depressed young people, Live For Tomorrow.
Guscic said the deal would also provide the opportunity to accelerate growth of the brands globally.
"We see significant opportunities in applying the benefit of our marketing and branding expertise, together with our scale, to drive market share gains," he said.
Webjet shares have been placed in a trading halt while the company raises around A$72 million ($76 million) via an entitlement offer at $5.60 a share. The group is also issuing 2.8 million new shares at $6.21 a piece.
Webjet shares last traded at $6.31, giving the company a market capitalisation of $510.4 million. The New Zealand-based group booked annual pro-forma earnings before interest, tax, depreciation and amortisation of $12 million, less than 10 per cent of bookings inside New Zealand.
- additional reporting AAP