An independent advisor report from Cameron Partners suggests Tourism Holdings’ $69.5 million merger with rivals United Campervans and KEA Campers offers “compelling” opportunities to cut costs.
The rental campervan operator’s board unanimously recommends shareholders sign off on the deal to grow its market share in a cash-and-scrip offer after Cameron Partners declared the transaction could potentially add “material value” for both Tourism Holdings investors and the United and KEA sellers.
The deal will lift Tourism Holdings Ltd’s market share of the rental caravan market to 45% from its current 27%
“We consider the strategic rationale for the transaction to be strong and the fleet rationalisation and synergy benefits to be achievable,” the report said. “The strategic rationale to reduce over-sector capacity and to achieve potential cost synergies is compelling.”
THL faces uncertainty within the global markets in which it operates. While the board remains confident in the long-term outlook for tourism, it recognises that there is little chance of increasing tourist numbers to New Zealand from the core European and United Kingdom markets over the coming two years.
The board believes the proposed merger strengthens THL’s position in these core markets. It allows the reduction of costs from the combined business, as duplicate resources and activities are removed.
More importantly, it allows the reduction of the total fleet size to a level appropriate to demand with a target fleet size of 1800 vehicles in a little over two years.
