2002

Flight Centre recommended takeover offer for ITG Ltd

Friday, 11 January 2002

Flight Centre Limited ("Flight Centre") and corporate travel specialist, ITG Limited ("ITG"), today announced that Flight Centre intends to make a recommended takeover offer for all the issued shares in ITG. Under the terms of proposed offer, ITG shareholders will receive 1 Flight Centre share for every 40 ITG shares held (the "Offer"). The duly constituted Board of Directors of ITG has evaluated Flight Centre's proposed offer and intends to recommend that all ITG shareholders accept the Offer in the absence of a higher offer. Directors of ITG and interests associated with them who together will own approximately 50% of ITG's issued ordinary capital intend to accept the Offer in the absence of a higher offer. Based on Flight Centre's two week volume weighted average share price of approximately $24, the Offer values each ITG share at $0.60 and the ordinary equity of ITG at $37.5 million. This represents a premium of approximately 50% to ITG's recent market prices. An entity associated with a non-executive Director of ITG, Mr Graham Turnbull, has committed to accepting Flight Centre's offer in relation to 14.7% of the shares in ITG in which he has a relevant interest. As a result, Flight Centre has a relevant interest in 19.9% of the shares in ITG. Comment by Flight Centre Mr Norman Fussell, Chairman of Flight Centre said: "The Offer represents an excellent outcome for all shareholders." "It values ITG's shares at a significant premium to their market price. The ITG Board, in recommending Flight Centre's proposed offer, recognises that the price is attractive." Mr Graham Turner, Chief Executive Officer of Flight Centre, said "We view the acquisition of ITG as a sensible strategic move for Flight Centre. ITG's major business, its corporate travel operation, is an attractive fit with Flight Centre's rapidly expanding Corporate Division businesses - Corporate Traveller and SBT Business Travel Solutions. By combining our businesses, we will create a leading Australian and New Zealand corporate travel business with access to technology that is arguably the best in the industry. Flight Centre intends to retain ITG's senior management and personnel." "Flight Centre recognises the importance of the very strong relationships that ITG has with its international partners, TQ3 Travel Solutions, and we are keen to work co-operatively with them to ensure these relationships continue successfully and add further value into the future." "We anticipate the transaction would be earnings per share positive for Flight Centre on both a pre- and post-goodwill amortisation basis in the first full year following the acquisition." "By accepting the Offer, ITG shareholders will maintain an involvement with ITG's businesses while benefiting from Flight Centre's outstanding record of shareholder returns and management expertise. In addition, capital gains tax rollover relief will be available to eligible ITG shareholders provided, after the Offer, Flight Centre owns at least 80% of ITG's shares." "Since its listing in 1995, Flight Centre's shares have been one of the top performers in Australia, with total returns of capital and income for Flight Centre shareholders averaging more than 75% per annum over the 7 year period." Mr Graham Turner said. Comment by ITG Mr Scott Blume, Chief Executive Officer of ITG, said "The new association with Flight Centre will be positive from an operational point of view. It will combine ITG's proven unique corporate travel, events management and technology skills with a company of substantial financial resources and market strengths. I am confident the outcome will be significant to our staff and our customers." Mr Leo Tutt, Chairman of ITG, said "The Board of ITG is pleased to support the proposed offer because it endorses the efforts undertaken by the Board and the senior management team over the past fifteen months to reposition ITG's operations. In particular, the Board is pleased to note that the significant merger benefits which will arise from creating a larger corporate travel organisation will be shared by ITG's various stakeholders." "As a result, the Board of ITG believes that the Offer is in the best interest of all our shareholders, employees, customers, partners and suppliers. The Board recommends that all shareholders accept the Offer in the absence of a higher offer ." The Offer - Timetable and Conditions ITG's Board has agreed to an accelerated offer timetable and joint documentation. It is anticipated that joint documentation will be lodged by the end of January 2002. The recommendation of the duly constituted Board of Directors of ITG is based on information currently to hand. On review of formal documentation the Board will provide a more detailed and formal recommendation in ITG's target's statement. ITG has entered into a letter of agreement with Flight Centre under which it has agreed not to solicit any alternative takeover or similar transaction. An entity associated with Mr Turnbull has entered into an agreement with Flight Centre that in the event that Flight Centre's offer is rescinded because of a failure to satisfy its conditions, Mr Turnbull has the right to put shares in respect of 14.7% of ITG for a cash consideration equal to 50 cents per share. Flight Centre's offer will be subject to the following conditions: * during or at the end of the offer period, Flight Centre and its associates have relevant interests in at least 90% of the ITG shares and have acquired at least 75% of the shares that Flight Centre offered to acquire under the bid; * no material adverse change occurs in the business, financial or trading position or condition, assets or liabilities, profitability or prospects, of ITG and its subsidiaries (taken as a whole) before the end of the offer period; * no disposal or agreement to dispose of the business or a substantial part of the business of the Lumina software division of ITG, whether directly or indirectly through a disposal or agreement to dispose of all or part of a subsidiary of ITG, and whether by sale, transfer, assignment, mortgage or otherwise, occurs or is entered into before the end of the offer period; * before the end of the offer period, the All Ordinaries Index published by Australian Stock Exchange Limited does not close for three consecutive business days at a level that is 15% or more below the level at the date of announcement of the offer; and * none of the standard prescribed occurrences occurs before the end of the offer period. Background on Flight Centre Flight Centre is the largest retail travel company in Australia and New Zealand and has more than 800 businesses and stores in six countries. The company's leisure and corporate travel brands include Flight Centre, Great Holiday Escape, Corporate Traveller, SBT, Student Flights, Travel Associates, CIM, CIS and Overseas Working Holidays. Background on ITG ITG is the leading ASX listed corporate travel management group in Australia and New Zealand. It is one of the largest event management companies in Australia and the holding company of The Events Centre and Lumina Technologies. ITG's annualised turnover is in the order of $400 million per annum. Advisers Flight Centre is being advised by Caliburn Partnership as financial adviser and Corrs Chambers Westgarth as legal adviser. ITG is being advised by TC Corporate as financial adviser and Deacons as legal adviser.