Ebookers pays £55m for rival

Ebookers, Europe's biggest online travel agency, yesterday stepped up its ambitious campaign to achieve sales of £1bn in two years with a deal to buy Travelbag Holdings, a specialist in discount long-haul holidays to Australia and New Zealand, for £55m.

Ebookers, Europe's biggest online travel agency, yesterday stepped up its ambitious campaign to achieve sales of £1bn in two years with a deal to buy Travelbag Holdings, a specialist in discount long-haul holidays to Australia and New Zealand, for £55m.

The agreed takeover creates a group employing 1,650 staff and with combined sales of about £500m, taking ebookers half-way to its revenue target, which it is using regular excursions down the acquisitions trail to achieve.

As part of the deal Travelbag's founder and chairman, the Australian entrepreneur Peter Wade, is selling his 61 per cent in the company for just under £34m.

The largely cash funded deal is ebookers' 12th in four years and the 10th where it has bought a bricks and mortar agency with limited internet sales, promising to bring them online. The group says it expects to complete up to another two deals of similar size elsewhere in Europe to reach its current growth target, with an acquisition in Germany, France or Italy seen as most likely.

Ebookers is paying £53.2m in cash and £1.8m in shares to take control of Travelbag, the Hampshire-based agency whose main brands are Travelbag, Bridge the World and Travelbag Adventures. The group is raising £39.8m of the cash through an underwritten placing of new shares and will finance the remainder through bank loans. News of the deal lifted ebookers' shares 7.5p to 357.5p last night.

The chief executive, Dinesh Dhamija, said the deal would increase buying power with suppliers including airlines, hotels, insurers and car hire firms. He said there was scope to reduce costs by integrating systems and through transferring work to India, where ebookers has a fast-growing outsourcing centre.

Ebookers, whose most popular destinations are in the USA, and Travelbag both specialise in selling surplus seats on scheduled mid and long haul flights.