Internet retailer lastminute.com says it will pay about £55 million for rival Online Travel Corporation to expand its travel and leisure business.
Lastminute.com , which sells everything from holidays to theatre tickets and gifts, is offering 0.1319 new lastminute.com shares for every Online Travel share. That values the stock at 31 pence, a 32 per cent premium to yesterday's close.
Online Travel brings a potential customer base of over 15 million online users through its own Web sites including travelstore.com and its partnerships with travel companies such as Thomas Cook.
The recommended deal will be lastminute's second takeover in the past year. In March 2003, it announced it would buy car rental firm Holiday Autos Group for around £40 million to expand its travel services.
Lastminute chief executive, Mr Brent Hoberman, dismissed any fears about Online Travel's profitability. The firm, which reported a pre-tax loss of £5.1 million in 2003, had cleared all debt and had raised £10 million in cash to ensure it met all regulatory requirements for the renewal of its operating licences.
Lastminute said it expected the purchase to boost earnings in the current financial year and to offer operating synergies of at least £4 million in the year to September 30th, 2005. It added that the deal would strengthens lastminute.com's position as the UK's leading independent online travel company.