Ticket to Gullivers costs $235m

Just 18 months after listing on the NZX Gullivers Travel looks set to be carried off by Queensland-based S8.

The ASX-listed travel and property company is offering Gullivers' shareholders $2.35 in cash per share in a deal that values the company at $235 million.

The offer represents a 40 per cent premium on Friday's $1.67 closing share price.

Gullivers' shareholders will also be entitled to cash dividends totalling up to 10.54c a share plus any available imputation credits - including the previously announced final dividend. It is the third time this year that an Australian company has made a bid for control of an NZX company. Waste Management shareholders have approved a "merger" with an Australian company which will see it delist.

Contact Energy is also facing a takeover in all but name from Australian parent Origin Energy.

S8 plans to acquire all of Gullivers' shares with the offer conditional on at least 50 per cent acceptance.

Gullivers managing director Andrew Bagnall, who established the company in 1976, has agreed to sell his 26.82 per cent stake and would be invited to join the board of S8 after the takeover.

Gullivers said yesterday that Bagnall could not comment on the takeover.

First NZ Capital research analyst Jason Familton said the offer appeared to be reasonable and the cash-only offer a positive move.

"If you look at other similar multiples for other transactions in this sector, it looks to be in line with those and potentially slightly above."

However, calling it a 40 per cent premium was not really a fair comparison as Friday's close was well down from the average price of $1.85 over the past month.

S8, whose business includes Harvey World Travel, has also made takeover bids for Australian companies Transonic Travel and Travelscene.

If successful, the three takeovers (together with the exercise by S8 managing director Chris Scott of 13.49 million options) would give S8 a market capitalisation of more than A$650 million ($776.3 million).

"The merger would create a business with increased scale and more diverse revenue streams leading to a more competitive position in the travel industry marketplace," Scott said.

S8 chairwoman Jenny Hutson said the merged business would have tremendous potential.

"This combination will be highly complementary," she said. "The accumulated experience and potential from the combined businesses will result in an outstanding global travel company which will benefit all S8 shareholders."

Shares in Gullivers were issued at $1.60 in December 2004 and have traded between a 52-week high of $2 and a low of $1.16. They closed yesterday up 69c at $2.36, while shares in S8 closed up A5c at A$4.05 on the ASX.

A committee of independent directors has been appointed but will not decide whether to recommend the offer until it sees the independent appraisal report.

S8 will fund the offer from existing cash reserves and through debt arrangements and send its offer to Gullivers shareholders soon. Gullivers is expected to send a target statement at the same time.

Gullivers have agreed to pay a reimbursement fee to S8 in the event of a successful better offer, while S8 would pay a fee to Gullivers should it not implement the proposal, except in certain circumstances.

Familton said the prospect of another offer seemed remote. "It's hard to think who would do that."

On Friday, Gullivers reported a net profit of $7.8 million for the year ending March, compared to the prospectus forecast of $8.4 million.

The lower profit was attributed to the $23.1 million purchase of the PIH group of assets, which included 60 retail travel outlets.

The offer

* ASX-listed S8 offering $2.35 cash a share.

* Offer values Gullivers at $235 million.

* 40 per cent premium on Friday's closing price.

* Offer conditional on at least 50 per cent acceptance.