Lastminute.com, the internet travel company that once epitomised dot.com excess, tapped the equity market for the second time in two months yesterday to fund the acquisition of a French online travel agency.
Lastminute, which reached operational profitability in France and the UK earlier this year, is issuing up to 34.6 million new shares to buy Travelprice.com, a private French travel and leisure group. The deal, the latest in a string of acquisitions, will give the UK group further scale in France and Italy, where it heads the online travel market.
Martha Lane Fox, lastminute's managing director who symbolised the tech stock millionaires when the group floated at the peak of the internet bubble in March 2000, said the group was "taking a pause for breath" before hitting the acquisition trail again. She said the company was "mindful" of the potential pitfalls of integrating acquisitions "but confident [we] have the management bandwidth to do it".
Lastminute said the purchase of Travelprice.com would yield €10m (£6m) in annual cost savings after one-off integration costs of €5m this year. Some of the cost savings will come from job losses among the two group's French employees, although Roland Coutas, Travelprice.com's chief executive, will join lastminute's executive team as head of the enlarged group's southern European operations. The deal is expected to enhance earnings in the first year of ownership.
Ms Lane Fox defended the decision to issue more paper in a weak market. "We have been leveraging our share price performance. Cash is one of the most precious things we have and until we generate cash we are unlikely to want to use it," she said.
Lastminute's shares, which dived below 20p last September, were flat yesterday at 92p. The group, which raised £113m when it floated at 380p-a-share in March 2000, had £34.7m of cash on its balance sheet at the end of March. Travelprice, which made a loss of €23.2m last year, will add €10m to lastminute's cash pile, Ms Lane Fox added.
Like lastminute, Travelprice offers customers the opportunity to make eleventh-hour purchases of flights, holidays and hotel bookings. It operates in France, Italy, Spain and Belgium, where it will increase lastminute's scale, helping it inch towards profitability at a group level.
"The deal shows that lastminute plc is able to support multiple brands and that is exciting. We have three brands in France – degriftour.com, lastminute.com and Travelprice.com – which appeal to different customers, a bit like three shop fronts," Ms Lane Fox said.
While recent additions to lastminute's portfolio have included well-known travel brands such as travel4less and Travelselect.com, Ms Lane Fox ruled out ever joining forces with another success story in the online travel sector, ebookers.com. She said the rival group's flights-focused model did not fit lastminute's product mix, quashing recent speculation of a tie-up.