Travel Network Group boss Gary Lewis is “incredibly sure” the deal to acquire the Global Travel Group will complete within six to eight weeks, adding that “the things that would normally scare a buyer, don’t scare us”.
TTNG announced its intention to acquire rival consortium from dnata on Thursday last week, in a deal which Lewis said would add another 285 agency branches to the TTNG membership, taking the total to 1,300.
Commenting on why he had announced the takeover before completion, Lewis said: “It is unusual that we’ve announced after the signing of the heads of terms. We signed them on Wednesday last week and announced it to all of the Travel Network Group members on Thursday, while dnata announced it to the Global Travel Group members at the same time.
“Very clearly, for us to announce before completion is incredibly unusual but the reason we have is based on a number of reasons.
“In any challenging environment, opportunities come that wouldn’t have been there before, and you saw dnata make announcements around their view of what the world was going to be like. They needed to make sure the Global Travel Group members were considered and looked after and put into a place where their focus and core was a membership proposition, and that’s the Travel Network Group.”
Lewis said all due diligence on the acquisition had also been completed, making him confident of a “smooth transition”.
“For us to be able to announce heads of terms, it was key that we’d already put a lot of the challenges away that would stop a deal completing through that process and we’ve already done that. So we are incredibly sure that this deal will complete,” he said.
“The due diligences and obviously the normal warranties that go along with that have already been given and assured.”
Lewis said TTNG had “huge expertise” in the trust account model, so was not daunted by the task of rolling the Global membership into his own.
“We have a huge expertise in trust accounts and trust account models and membership propositions so our expertise in that is already given with the Travel Trust Association and our understanding of that, so all the things that would normally scare a buyer, don’t scare us,” he said.
“The most important thing for us was making sure that our existing members of The Travel Network Group understood why it’s important for them and us strategically to bring Global on board, and then also to explain to Global members, as quickly as possible, why we believe that they were the right fit for us to ensure that we help them through this crisis, and they benefit from our scale as the Travel Network Group.”
Lewis said the reserves that he had set aside to help TTNG get through the Covid-19 crisis had not been touched by the deal to acquire Global.
“With the Global deal, I am not threatening that pot of cash that we have to survive over the next period of time,” he said. “This is a deal where it wasn’t about payments up front. It was about making sure the members came to the right place. So we have not risked any of that cash for this proposition.”
But he denied he was taking Global on with no money changing hands.
“There is a value for that business and we are rightly going to pay a value for that, but obviously it’s a different value to what we would have paid six months ago. We’ve set it up so that it costs us no money up front, and we pay over a period of time,” he explained.
Lewis said it was “right” to speak about the financials of the deal.
“It tells you that dnata are making decisions not about making money from a proposition but about making sure their members are considered and looked after in the right model. I’m sure dnata could have sold to other people at a higher cost, with upfront cash, and there will be people out there trying to bag really good deals.
“But this wasn’t about that for dnata or us. We’re not going to risk our business to acquire 285 members, but absolutely our business benefits from bringing those 285 members on board. So how do we work out a deal that fits everybody and dnata – fair play to them – have been incredibly entrepreneurial in putting that together with ourselves.”
Lewis said the deal has three months to complete but he was confident of doing it in half the time.
“We are working as quickly as possible. We have three months to complete but we expect it to be completed in six to eight weeks’ time. Six week is really quick for this type of deal, but there was a huge amount of work that had been pre-empted before the heads of terms were signed,” he said.
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