Serko buys Arnold Travel for 'nominal sum'

Friday 1st May 2015

Serko, the online travel booking business, has bought Expedia's Arnold Travel Technology for a confidential nominal sum, which it expects will boost its Australasian transaction volumes by at least a fifth.

The all cash deal is expected to increase sales by 7-8 percent in the six months ending Sept. 30, though isn't likely to increase earnings before interest, tax, depreciation and amortisation until the second half of the 2016 financial year, Serko said in a statement. Those forecasts rely on Auckland based Serko retaining most of Arnold's existing client base.

"This is an important strategic investment for Serko given we now expect around US$4 billion of Australia's corporate travel spend to be booked through Serko's platforms," chief executive Darrin Grafton said. "Through this transaction and our ongoing relationship with Expedia Inc, we're able to continue to serve Arnold's corporate customers and government accounts, significantly grow our business and to affirm our commitment to our TMC (travel management company) resellers, which we maintain are crucial to our ongoing success in the region."

In March, Serko warned annual revenue will likely be between 4 percent and 6 percent below the $11 million prospectus forecast for the year ended March 31 as some payables were pushed out into the following year. It was also downbeat on the prospects for 2016 due to the strength of the New Zealand dollar and delays to its mobile product, which it anticipated would trim 8 percent from its forecast for sales of $8.3 million in the six months ending Sept. 30.

Last year, Serko raised $17 million in new capital selling 15.5 million new shares at $1.10 a piece, via an initial public offering to fund its growth ambitions and repay debt. Founders Darrin Grafton and Bob Shaw sold a further $5 million worth of shares into the offer, retaining about a 20 percent stake and have agreed not to sell any more shares until two days after Serko announces its 2016 annual result.

The company will announce its 2015 annual result on May 22.

The shares last traded at 94 cents, and have dropped 18 percent this year.

BusinessDesk.co.nz

Comments from our readers

No comments yet