S8 completes Gullivers takeover

Queensland travel company S8 said today it had 93.9 per cent control of Gullivers Travel and would move to compulsorily acquire the rest.

The announcement comes just as S8 has itself come under takeover attack from Australian property and tourism investor MFS Ltd, which launched a A$700 million ($840m) bid for S8.

S8 chairwoman Jenny Hutson said today that S8 NZ Pty Ltd had become a dominant owner in Gullivers Travel Group Ltd and was giving notice as required under the Takeovers Code.

Shares in S8 surged as much as 35 per cent to a record high on Monday after the MFS bid was announced, while MFS fell more than 11 per cent on concern about the size of the acquisition and integration risk.

S8's share price was 6 per cent shy of MFS's offer. S8 also announced a 20 per cent rise in fiscal 2006 net profit to A$21m, which it forecast would more than double to A$44m this year and triple to A$60 million in fiscal 2008.

Combined S8 and MFS would manage and market more than 14,000 apartments and have more than 1700 retail travel outlets in Australia and more than 2300 worldwide.

MFS said the acquisition was expected to be earnings per share positive in fiscal 2007.

S8 is recommending the MFS offer to shareholders.

MFS, which through its Stella Resorts Group manages a pool of apartments and holiday accommodation in Australia and New Zealand, said its offer was at a 39 per cent premium to S8's pre-bid price.

S8, owner of the Harvey World Travel retail travel agency business, manages and markets about 5000 apartments in 48 resorts in Queensland state. MFS this year also bought the Outrigger accommodation group's Australian and New Zealand operations, while S8 has also expanded its operations through its Gullivers, Transonic and Travelscene acquisitions.

S8 bid $2.35 cash per share for Gullivers, a 40 per cent premium on the pre-bid price of $1.67 when the offer was announced in late May.

Gullivers independent directors recommended the bid, which was at the top end of an independent assessor's valuation range.

- NZPA