Lastminute launches £50m offer for online rival OTC

By Susie Mesure
Thursday 04 March 2004 01:00
comments, the acquisitive internet retailer, yesterday made its long-anticipated move for Online Travel Corp that values its rival at more than £50m.

The recommended purchase, which follows more than two years of on-off talks, is its biggest all-share deal to date and brings lastminute up to 15 million potential new customers and a host of new brands, from to

Brent Hoberman, lastminute's chief executive, scotched any lingering fears about OTC's balance sheet although his move comes just weeks after OTC was forced to raise fresh funds to secure its operating licence. The rights issue meant OTC had £10m of cash in the bank and no debt, he added.

Lastminute is offering 0.1319 new shares for every OTC share. It will issue about 25 million new shares in all, diluting existing shareholdings for the third time in less than two years. Mr Hoberman said his stake had almost halved to about 5 per cent since the group began using its shares to fund its ambitious expansion strategy.

Analysts said the move made sense, but suggested that one of the US travel giants such as Sabre Holdings, the owner of, could launch a counter-bid. OTC shares soared 20 per cent to 28.25p, while lastminute slipped 8p to 227p.

Robin Chhabra, at Evolution Beeson Gregory, said: "It opens up new distribution channels for lastminute to push its content through. The revenue synergies are also quite exciting." He expects the deal to enhance lastminute's earnings this year, adding: "It bodes well, given the group's track record with acquisitions."

Lastminute has spent close to £200m on acquisitions in the past two years, including £40m for the car rental broker holiday autos last March. It gained its first physical presence earlier this year with the purchase of First Option, a bricks-and-mortar hotel-booking agency that owns kiosks in railway stations across London.

Mark Jones, OTC's chief executive, said there was "a strong commercial rationale" for the deal, which has already secured the approval of 27 per cent of its shareholders.

Mr Jones will stay on, along with the rest of his management team, although the bulk of the group's 250 employees are expected to lose their jobs. This would help lastminute save £4m from combining the two businesses, Mr Hoberman said.

Lastminute is buying OTC for its "white-label" business, which enables it to run travel websites for a host of companies using their own branding. Its main clients include Thomas Cook, Lunn Poly, The Times, Tiscali and Freeserve. Lastminute planned to retain all of OTC's existing brands.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments