Travel giant up for $140m sale

By CHRIS DANIELS

New Zealand's biggest travel company, Gullivers Pacific, is up for sale with a price tag of up to $140 million.

Investment bankers are working on selling the business through a share float on the stock exchange or a private sale.

The business is owned by founder Andrew Bagnall, of Auckland, and sells retail and wholesale airline tickets and travel packages.

The Business Herald understands sharebroking firms have been pitching to handle a float.

One source said the aim was to sell the business by October.

Craig Brownie, managing director of investment bank Bancorp, said Bagnall had some "unsolicited interest" over the past 12 months from others in the industry and from brokers.

Bagnall had asked Bancorp to evaluate those options.

With earnings before interest and tax of about $20 million, Gullivers is seen as being worth between $100 million and $140 million.

An issue for a sale is how dramatic changes in the way people book travel will affect the business.

Airlines have stopped paying commissions on many ticket sales, and are trying to get consumers to come direct through the internet.

Bagnall is understood to be amenable to keeping 20 per cent of his stake and selling 80 per cent. Bids for individual parts of his travel empire, are not being considered.

Tony Dominey, publisher of industry publications Travel Today and Tabs on Travel, said he understood Qantas Holidays, a division of Qantas airlines, had been approached as a potential buyer.

Another industry figure said he did not expect a public float.

He said Bagnall was independently wealthy, and would be more likely to be trying to sell his company to a trade buyer.

Traditional travel agencies are being squeezed on several fronts. Another development is the increasingly vicious fight between airlines and owners of the Global Distribution Systems, through which airline bookings are made.

The relationship with GDS will be of particular interest to any new buyer of Gullivers, as it has just signed a deal to provide "content" to a new internet-travel service called Zuji.

This will not be tied to any single airline, making it easy for New Zealanders to book travel and accommodation online.

Zuji is supposed to start operating this year and is owned by a group of airlines. Air New Zealand is not involved.

Sabre, a US company that runs a GDS network linking travel agents with airline booking systems, is also a part-owner of Zuji.

Airlines are trying to avoid paying GDS companies every time a traveller buys a ticket through their network.

In response, the GDS owners - Sabre, Gallileo and Amadeus, have been buying travel agencies, so they can deal more directly with customers.

Sabre is likely to be a prime candidate to buy Gullivers.

Gullivers' empire

* Gullivers Pacific is a group of companies that wholesales and retails airline tickets and travel packages. It says it handles 400,000 international and up to 500,000 domestic travel arrangements a year.

* Employs: 1100 people in NZ, 200 in Australia.

* Revenue: $70 million.

* Earnings before interest and tax: $20 million.

* Brands under the Gullivers Pacific umbrella: Holiday Shoppe, United Travel (50 per cent ownership), Signature Travel, Atlantic Pacific Radius (50 per cent ownership), Synergy (38 per cent ownership), Gullivers Holidays.