US-based Travelzoo has expanded to the Asia-Pacific with the acquisition of the Travelzoo Asia Pacific (APAC) business unit. Formerly operating independently under the Travelzoo brand, the consideration for the acquisition was a mixture of cash and a US$5.7 million promissory note.
Travelzoo is a global Internet media company that claims to maintain a membership of 27 million individuals distributed across North America, Europe, and Asia Pacific and with 26 offices distributed globally, publishing and reviewing deals from more than 2000 travel and entertainment companies.
This business was independently operated by Azzurro Capital under a licensing agreement with Travelzoo. With a presence across China, Japan, Hong Kong, Taiwan, Australia, and Southeast Asia, the APAC business unit had reported FY2014 revenue of $10.8 million. According to Travelzoo, the rationale for the acquisition was to access “…opportunities arising from the fast-growing number of Chinese outbound travelers.”
According to a Tnooz commentary, the initial APAC licensing deal six years ago was structured as a family affair aimed at allowing the Bartel brothers to retain control of the company, while fuelling its growth in the APAC region and enabling the NASDAQ-listed firm to receive an infusion of capital. Travelzoo and Azzurro had a hosting agreement in which Travelzoo hosted and operated much of its former division’s software, data and content.
Exercising the option to acquire the APAC unit at fair market value determined by a third party valuation expert, Travelzoo used available cash form internal reserves and a promissory note of $5.7 million with a maturity date of three years.
Prior to the acquisition, Travelzoo had assigned a committee of independent directors to determine whether the “….acquisition of APAC was advisable, fair and in the best interests of the company’s stockholders other than Azzurro Capital Inc., the principal stockholder of Travelzoo Inc”.
As part of the acquisition, the company has also appointed two new independent directors to its board: Caroline Tsay, an HP software exec, and Beatrice Tarka, the founder and CEO of travel search engine Mobissimo.