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Industry consolidates as Helloworld moves on Magellan

December 20, 2017 Headline News No Comments Email Email

One of the travel industry’s biggest players is about to grow bigger following yesterday’s announcement that Helloworld Travel, Australia’s largest retail franchise travel business has, through a wholly-owned subsidiary, entered into a heads of agreement to acquire the Magellan Travel Group for AUD 32.5 million.

The move will increase the dominance of big multis in the Australian travel industry landscape. Magellan managing director, Andrew Macfarlane, and the Magellan management team will all be joining Helloworld Travel.

Magellan was founded by Andrew Jones (chairman); Kevin Dale (who retired from the board in mid-2017); and Trevor Jones. Other directors listed on the company’s website include some top travel industry names: Penny Spencer; Carl Buerckner; and Andrew Macfarlane (managing director).

The acquisition by Helloworld Travel Limited (HLO), subject to the execution of formal transaction documentation, will be funded by a mixture of 65% cash and 35% in HLO shares, with the cash component to be funded from existing facilities.

Magellan team: (left to right) Carl Buerckner, Andrew Macfarlane, Andrew Jones, Penny Spencer, Trevor Jones, Kevin Dale

Helloworld chief executive, Andrew Burnes, said Helloworld was consolidating its position in the retail and corporate travel agency business in Australia and seeking to leverage its on-going technology developments and supplier relationships.

Magellan’s website yesterday proclaimed the Magellan operation as member-owned and member-driven: “Magellan Travel Group’s mission is to empower independent travel agents to control their own destiny while maximising the rewards for their success in collaboration with a network of like-minded high-performance agents co-operating and learning from each other.

“Magellan Travel Group provides these agents with a suite of preferred suppliers ideally suited to their market. Our combined volume together with low central cost delivers best value for customers and increased profit for their business.”

It remains to be seen how the Helloworld corporate culture will mesh with that of Magellan. Many Magellan members are proud to be independent and see that as an advantage and a point of distinction over the multi groups.

In a statement issued yesterday, Burnes said, “We are delighted to welcome the 130 agents who are part of the Magellan network around Australia to the Helloworld Travel group. Magellan has been established for nearly 10 years and has a great network of members in both the leisure and corporate agency businesses.

“Adding the Magellan network to the Helloworld Travel group will improve the scale of our operations throughout Australia and give Magellan members the opportunities to take advantage of that scale and at the same time benefit from our significant investment in technology and distribution strategies.”

Following completion of the transaction, which is expected to occur in January 2018, Helloworld Travel will have over 2300 members in Australia and New Zealand, comprising over 1800 retail and corporate agencies and over 470 travel brokers.

The Helloworld statement said the deal was expected to be earnings accretive and to materially increase the volume of TTV that Helloworld Travel members transact with travel suppliers in Australia and globally by approximately AUD 900 million.

Burnes said he was delighted that Magellan managing director, Andrew Macfarlane, and the Magellan management team will all be joining Helloworld Travel.

“I congratulate Andrew Macfarlane and the founding shareholders of Magellan for building what is a great network of agents across Australia and we are delighted to welcome them to the Helloworld Travel family. Many of these agents were originally with Helloworld and its predecessors in years gone by and with the significant changes we have made in the Helloworld business over the last two years we are looking forward to welcoming them back,” Burnes said.

The Magellan network will continue to operate in its current format and will be the sixth retail network of Helloworld Travel in Australia with the others being the Helloworld Travel branded network, the Helloworld Travel Associate network, the Helloworld Business Travel network, the My Travel Group network and the MTA network.

Chairman of Magellan Travel Group, Andrew Jones, said he was delighted to be securing the long-term future of the Magellan Group.

“Success in travel retailing moving forward is a challenge of growth and scale. This deal delivers on both fronts with the additional benefit of delivering to our members the technology opportunities that Helloworld Travel is developing to drive productivity and yield to all of its members.”

Helloworld Travel Limited has been advised by PricewaterhouseCoopers and MinterEllison.

Written by Peter Needham

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