By Adrian Herbert
Public-to-private takeover bids are always revealing because they must be played out largely as public theatre performance, which is not how private equity firms like to operate.
BGH Capital’s bid to take control of online direct-to-consumer travel agency business Webjet (ASX: WJL) is shaping up as an intriguing example because an interesting cast are playing out an unusually fluid script.
The curtain for the next act is expected to be raised at Webjet’s annual general meeting (AGM) on 28 August, if not before.
On 30 June, BGH wrote to Webjet requesting the company to include in the AGM a resolution “that shareholders approve a capital return of up to approximately $100 million”.
In its response, Webjet pointed out that “under the Corporations Act shareholders cannot approve a resolution relating to capital management that has not first been proposed by the directors”.
Presumably, that meant it was up to Webjet’s board to decide on any resolutions to be put to the AGM.
Webjet continued, saying it was actively considering capital management initiatives, welcomed constructive engagement with its shareholders and would continue to have regard to the views of all shareholders in formulating its capital management strategy.
“An update on those initiatives, including any resolutions to be put to shareholders at the AGM, will be announced at the appropriate time, being at or before the forthcoming AGM.”
So, feel free to talk to us but wait to see whether we will be putting forward any resolutions.
Whether BGH acts before the AGM will likely depend on what commitments it can gain from the Webjet board in private discussions in the meantime.
The backstory is that BGH made an unsolicited non-binding 80 cents-a-share indicative offer for Webjet on 13 May. That bid was supported by Ariadne Australia Ltd which is controlled by veteran corporate raider Gary Weiss’.
After consideration, and consultation with shareholders and advisers, on 16 May Webjet’s board rejected the bid as materially undervaluing the company.
The BGH request for a resolution to be put to the AGM appears contradictory at first glance. At the time it made its non-binding offer, BGH said this was “based on a number of key assumptions, including, without limitation, assumptions relating to cash levels, no external debt, no dividends or other distributions by way of buy-back being announced, and no business acquisitions prior to implementation”.
The capital return resolution request appears to be targeted at flushing out a response from Webjet’s smaller business rival Helloworld (ASX: HLO) which also holds a significant stake in Webjet.
Until September last year, Webjet was part of a larger ASX-listed business, Web Jet Limited. The consumer business, Webjet Group was then spun off leaving what is now known as Web Travel Group (ASX: WEB) running the more profitable corporate travel business.
Soon after the demerger, Helloworld acquired a 19% stake in Webjet. Helloworld’s intentions remain unclear. Equities analysts have raised doubts over whether Helloworld has the clout to acquire Webjet or whether it has simply positioned itself to be in a favourable position if a merger is proposed.
In its results for the six months to December, issued on 26 February, Helloworld reported revenue down 7.6% to $103.8 million and net profit after tax down 32.4% to $10.8 million. But the company said it had strong liquidity with cash reserves of $108.8 million, no bank debt and held shares in Corporate Travel Management (ASX: CTD).
On 4 July, Webjet had a market capitalisation of $352.27 million; the company’s shares closed that day at 91 cents, up from below 50 cents in early April.
BGH’s bid to gain control of Webjet came to light when it lodged a substantial shareholder notice on 12 May revealing a 10.76% shareholding in the company, made up of 5.89% held by BGH and 4.87% held by Portfolio Services Pty Ltd, a company associated with Ariadne and Weiss. By late June, the BGH syndicate had increased its holding to 14.93% so, clearly, it has not been put off by Webjet’s initial rebuff.
At least one other substantial shareholder expects BGH to come back with a higher offer.
MA Financial Group (ASX: MAF) increased its holding from 8.12% to 9.3% on 27 June.
Announcing on 30 June the AGM resolution request from BGH, Webjet’s board said its members were actively considering capital management initiatives and welcomed constructive engagement with shareholders. An update on capital initiatives, including any resolutions to be put to shareholders at the AGM would be announced “at the appropriate time, being at or before the forthcoming AGM”.
Trading conditions for travel agencies deteriorated over 2025 as leisure travelers worried about inflation and security in some countries. Many travelers decided against long-haul destinations such as Europe in favour of nearer Asian destinations. Demand is unlikely improve much this year. Inflation is less worrying but security concerns in Europe have not improved. Meanwhile, demand for travel to the United States has dropped since President Donald Trump took office and reports emerged of immigration officials refusing entry to some tourists because of their political views.
The present still looks like a good point in the demand cycle to buy into the tourism sector, assuming, of course, you are optimistic about future global security.
Image; Travel agency revenues are down with many leisure travelers choosing nearer Asian locations such as Thailand over long haul destinations in Europe.