Nasdaq-listed Travelzoo has exercised its option to take back ownership of its Asia-Pacific business, which has been operated by Azzurro Capital under a licensing agreement since 2009.
Travelzoo has paid the equivalent of $5.7 million for its APAC operations, funded by "available cash and a promissory note which matures in three years".
CORRECTION 28 August: The $5.7 million figure was incorrect. Travelzoo hired an "independent financial advisor", who said the fair market value of the APAC operations to be used as the option exercise price, which was $22.6 million. We apologize for the error.
Back in 2009, when Azzurro paid $3.6 million.
The transfer of the APAC operations to a licensee was complicated and controversial, although a law suit accusing the directors of "breaching their fiduciary duties" was thrown out by the New York court in 2014.
In 2014, the APAC unit turned in revenues of $10.8 million. This compares with revenues of $142 million from its European and North American operations in the same year.
At the start of this year, Travelzoo's Asia Pacific team shared some details with Tnooz about the scale of its operations in the region, in terms of members:
- Australia: 700K+ members
- China: 1.1M+ members, 2M + users
- Hong Kong: 440K+ members
- Japan: 1.1M+ members
- Taiwan: 220K+ members
It explained:
"Specifically for China, Travelzoo’s approach of marketing its content is different, and this has resulted in a huge following of active Weibo users, hence "2M + users" is a more accurate description of Travelzoo’s penetration in China".
And, like almost every statement issued by a travel tech firm this year, Travelzoo explained its decision to buy back APAC would "position Travelzoo to tap into opportunities arising from the fast-growing number of Chinese outbound travelers."
Travelzoo is a veteran in the online travel space, having been founded in 1998. As a listed business, its financial performance is constantly under the microscope and speculation about it being a potential takeover target is never far away - Facebook, Google and Amazon are often rumoured to be interested.
Taking control of APAC ties up a significant loose end for any potential takeover. With a market cap currently around $130 million, Travelzoo could be of interest to one of the behemoths named above.
But compared with the amount of money being invested in China, and the interest many Chinese online travel businesses have in becoming international, and with APAC revenues of $10m+ already, there could be other interested parties.
Elsewhere, Travelzoo has also announced that it is adding two new independent directors to its board: Caroline Tsay, vice president and general manager of the HP Software Online Business and Beatrice Tarka, co-founder and chief executive officer of travel search site Mobissimo.
See also:
Tnooz coverage of Travelzoo's 2015 Q2s (July 2015)
Tnooz coverage of Travelzoo's 2015 Q1s (April 2015)
Tnooz coverage of Travelzoo's 2014 Q4/FYs (Jan15)