Cheers Percy. Interesting...

Online travel firm Webjet tipped to be on the Fairfax radar
Michael Bennet From: The Australian September 18, 2010

FAIRFAX Media has hinted it's on the lookout for acquisitions, according to analysts who tip a possible bid for online travel company Webjet.
They say Weject will complement its existing web-based assets.

Analysts at Citi told clients yesterday that Fairfax management had expressed a renewed interest in potential acquisitions at a recent presentation to its sales traders, with online transaction-based businesses high on the list.

Fairfax, which was set to release a much anticipated review of its business next month, wanted to leverage the brands and existing traffic from websites of mastheads The Age and The Sydney Morning Herald to new businesses, Citi said.

"Webjet meets all the requirements outlined by management in our view . . . with scope to leverage its accommodation site Stayz.com.au and the web traffic through the main websites," analyst Justin Diddams said. Fairfax owns a plethora of online businesses through its digital arm, including MyCareer, RSVP and Domain, and the paid-for website of The Australian Financial Review.

Mr Diddams said any additions to its stable would probably be restricted to small to mid-size players due to the company's credit constraints.

With a market value of about $189 million, Webjet fits this requirement.

For full-year 2011, Webjet has forecast a 15 per cent rise in net profit after tax from to $12.1m, on earnings before interest, tax, depreciation and amortisation of $15.7m.

Citi said suitors would have to pay 20 times earnings for online assets with structural growth. The bank also noted that 16 per cent of Webjet was held by its management and board.

Webjet closed 3.8 per cent higher at $2.45.

At that price, Mr Diddams said, the acquisition would be earnings neutral for Fairfax in year one and marginally profitable in year two