Sunshine, a UK-based online travel agency with a highly-recognized brand name, has been acquired by On the Beach for £12 million. This acquisition has been beneficial for both companies, as no redundancies will be made as a result of this, and On the Beach will be able to enhance their customer reach and exclusivity. The unforeseen, but very beneficial, consequence of this is that shares in On the Beach have continued to rise significantly, and its overall value is growing rapidly as well. This suggests that this move has also benefited investors.
On the Beach is a very popular online travel agency, and it seems that they are now basking in the sun, as they have acquired Sunshine, a rival company, for a sum of £12 million. On the Beach, based in Cheadle, acquired Northumberland-based company Sunshine recently, funding the acquisition through various bank facilities, including the Lloyds banking credit facility, and their own cash resources.
Customers have already been reassured about two key things:
- On the Beach will continue to be able to pay its dividends, even after the acquisition.
- None of the Sunshine staff will be made redundant.
Thanks to the acquisition, On the Beach will be able to improve their current financial standings. Furthermore, the group aims to further their margin opportunity, create short or medium synergies, and essentially grow its financial standing.
The acquisition of Sunshine has been a golden move for On the Beach, as it is a very well-established brand. Furthermore, it will bring some 200,000 new customers to On the Beach’s already substantial customer database of around 1.2 million people. What makes the acquisition so successful, however, is the fact that it has given them a much greater earning potential. On the Beach is all about exclusivity, and Sunshine has some excellent contracts already in place.
The 13 months leading up to 30 September 2016, Sunshine had an EBITDA of £1.6 million, and gross assets of £18.6 million. The stock value of this, and of On The Beach, are of particular importance. Key details about On the Beach include:
- That it was started in 2004.
- That it sold a majority stake in 2007 to Livingbridge for £36 million.
- That it sold a majority stake in 2013 to Inflexion Equity Partners for £73 million.
- That it was floated on the London Stock Exchange in September 2015, listing at £240 million.
As a result of the acquisition, On the Beach shares shot up 5.42%, holding at £3.60. What this means, therefore, is that the company has created an interest prospect for investors. Shares have always been very strong in the company, with the exception of a crash following the Brexit vote in June 2016. However, since then, the share price has been climbing significantly again, now standing at twice the IPO price. Additionally, their pre-tax profit reported in May 2017 was 28% up, and their earnings per share had risen by 27%. There was also a significant deduction in debt, from £6.6 million to £2.3 million, even after acquiring Sunshine for £12 million.
It seems that the reason why On the Beach is doing so well, is that they focus on a niche market. Furthermore, they use innovative technologies in order to ensure their clients can find the holiday of their dreams. The acquisition of Sunshine strengthens this. Interestingly, some now suggest that investing in shares in On the Beach may just enable people to not just enjoy holidays in the sun but, potentially, enable them to retire in the sun as well.