Tourism Holdings shares surge; KEA, United Campervan merger to swell profits
By Hannah Lynch
Sept. 3 (BusinessDesk) - Shares in Tourism Holdings rose to a six-month high after the NZX-listed campervan rental
company said it will acquire KEA Campers and United Campervans in a $69.5 million deal that will double its per-share
earnings in 2014.
The stock rose about 14 percent to 65 cents, the highest since Feb. 27. Shares in the Auckland-based company have shed
about 3 percent this year and are rated 'outperform' based on the consensus of three recommendations compiled by
Reuters.
"The merger is the best response to the challenging realities of the New Zealand tourism market," chairman Keith Smith
said on a conference call. "There is the potential for enhanced dividends - and its delivers enhanced return to
shareholder value."
The deal is subject to 50 percent shareholder approval. A special general meeting will be held in mid-October, with the
merger scheduled for completion on Oct. 31.
Following the merger THL forecasts its operating profit to increase to $19.3 million in the June 2013 full year from
$16.3 million a year earlier. That includes acquisition and implementation costs of $1.7 million. In 2014, the first
full year after the merger, operating earnings are expected to rise to $28.8 million, while after-tax earnings per share
are set to double to 13.3 cents a share. Its assets will rise to about $350 million from $280 million.
"The industry in New Zealand for the UK and Europe is still suffering," chief executive, Grant Webster said. "We see the
market declining further in 2012 - the rugby world cup provided some cash - kept people in business and kept them in a
false sense of security."
Last week, THL returned to profit after an increase in sales from the Rugby World Cup and the first full-year
contribution its Road Bear unit in the US. Profit was $4.3 million in the 12 months ended June 30, from a year-earlier
loss of $27.3 million. Sales increased 8 percent to $200 million.
The deal will see United Campervans principal Kay Howe join THL's board as an executive director to help with the
integration, while Grant Brady, KEA principal and managing director will lead the RV Manufacturing campervan group,
which he has a 50 percent shareholding in. THL also proposes that Brady lead the company's New Zealand vehicle sales
operation.
(BusinessDesk)