Will An Acquisition Boost The Corporate Travel (ASX:CTD) Share Price?

Can a US-based acquisition give the Corporate Travel Management Ltd (ASX: CTD) share price a boost?

Corporate Travel Management is a provider of travel management solutions to the corporate market. It prides itself on personalised service excellence and client-facing technology solutions, and these traits have helped them to win AFTA’s award for Australia’s Best Corporate Travel Management Company twelve times. Corporate Travel is currently operating throughout Australia, New Zealand, North America, Europe and Asia.

Corporate Travel’s US Acquisition

Corporate Travel Management is going to acquire Texas-based Corporate Travel Planners with a focus on the University and Education sector.

The initial purchase price is US$18 million, or $26.5 million in Australian dollar terms. This is around six times the estimated underlying net profit before tax for FY20 with the purchase price to be paid 90% in cash and 10% in Corporate Travel shares.

The cash will be funded by short term debt and cash flow.

There will be further payment of up to US$18 million or AU$26.5 million based on achievement of future profit hurdles.

Why Is Corporate Travel Making This Acquisition?

One of the main reasons is that it will increase scale in the USA with annualised total transaction value (TTV) passing US$1.5 billion, which would cement its place as a top 10 provider in North America.

Corporate Travel likes the idea of gaining more exposure to the Education sector and it’s a growth area with less exposure to economic downturns.

The main obvious reason is that it will add to Corporate Travel’s profit / earnings per share.

Management Comments

Corporate Travel Managing Director Jamie Pherous said: “CTP will be highly complementary to our organic expansion strategy and we believe that combined, we will forge a strong service proposition to the University and Education sector that will contribute strongly to the company’s future growth in North America.”

Free report: 3 cloud stocks to buy now

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

We’ll send you our report for free, including the names, ticker codes and analysis when you enter your email address below.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Free report: 3 cloud stocks to buy now

As we emerge from COVID-19, some tech companies are growing faster than ever. Rask’s investment analysts have identified 3 growth stocks set to benefit. Big time.

Click here to access this report for free, including the names, ticker codes and analysis.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading: