Gullivers good fit for consolidation itinerary

Gullivers may buy holidays to the Gold Coast through S8.

The proposed takeover of Gullivers Travel by ASX-listed S8 is a natural consequence of consolidation across the Tasman, says founder Chris Scott.

He said yesterday: "You can hardly consolidate the Australian market and leave New Zealand out. New Zealand is an important market for Australia inbound and outbound."

Scott, who is also S8 managing director, said consolidation in the travel industry already had taken place in New Zealand.

"All that's happening is Australia is catching up to New Zealand.

"You fellas have led the way."

There was little direct competition between Gullivers and S8 but the mutual supply of products made the businesses a natural fit.

"We will buy all sorts of holidays in the South Pacific through Gullivers and Gullivers will buy holidays on the Gold Coast through us."

S8 has also made takeover bids for two other Australian companies, one for Travelscene and the other, which went unconditional yesterday, for Transonic Travel.

Scott said it was premature and potentially destabilising to talk about the practical implications for the two companies, although it was certain that savings would be found.

"The next phase is getting the synergies out of them and synchronising all the systems ... we've got offices all over the place, we've got to make some sense out of this."

Apart from leading to operational savings, the consolidated S8 business would be better placed to negotiate with suppliers who had been cutting back on margins.

"Well, clearly that's a lot harder to do now because we're a much bigger, stronger and powerful company," Scott said. "So we don't see suppliers cutting back margins at all any more. We think we've stopped that dead."

The Gullivers takeover is conditional on a minimum 50 per cent acceptance, with S8 planning to acquire all shares.

The company is confident of gaining from 50 per cent to 90 per cent, at which point it could compulsorily purchase the remaining shares. However, Scott said that if it did not make 90 per cent it would have to live with it.

"You can't unscramble the egg," he said. "What's done is done."

* The S in S8 stands for Singapore, the 8 for prosperity in Cantonese.


THE OFFER

* $2.35 cash a share.

* 40 per cent premium on May 26 closing price.

* The offer values Gullivers at $235 million.

* Conditional on minimum 50 per cent acceptance.

* Independent appraisal report not yet released.