After a brief halt, shares of Guestlogix (TSX:GXI) are rising today after the company announced it had reached a deal to acquire all issued and outstanding shares of Initium Onboard.
Initium is a United Kingdom-based provider of on-board retail technology to the airline and rail industries. Guestlogix will pay GBP £3.3 million, or approximately $5.17-million Canadian dollars for the company.
GuestLogix will pay for Initium with a mixture of cash and shares. The company announced a $3-million non-brokered private placement to facilitate the cash component, which represents 60% of the deal. The other 40% will come from common shares; the company will issue 4,287,670 shares at price of CAN$0.44 per share.
Guestlogix CEO Tom Douramakos said, “This transaction will greatly advance our leadership position in the global onboard retail marketplace, adding 250 million annual passenger trips to our already one billion passenger-trip strong customer base,” adding, “In addition, we will be better positioned to execute on key growth strategies, such as further penetrating the rail industry and introducing destination-based merchandising programs on board, as Initium Onboard has proven success in both of these areas. We are excited to welcome Initium Onboard’s customers to the GuestLogix family, and look forward to working with its team, all of whom share in our desire to further enhance the onboard retail marketplace for travel operators, content providers and passengers alike.”
Founded in 2001, Bristol-based Initium Onboard’s clients include airlines such as Air Arabia, Malaysia Airways, and Singapore Airlines, rail companies such as Eurostar and Renfe, and service companies such as LSG Sky Chefs.
Guestlogix was formed in 2002 and has since become the dominant player in the business of delivering ancillary revenue to airlines, with contracts to service more than a billion trips annually. At last year’s M Partners Technology Conference in Toronto, Guestlogix CEO Tom Douramakos said all little extras; a fee for your second bag, a surcharge for reserving your seat in advance, are actually saving the industry, producing close to $60 billion in revenue last year. Without this ancillary revenue, the airline industry would still be a losing game. The company’s revenue has grown from just $5.43 million in fiscal 2007 to $22.8-million in 2011
At press time, shares of Guestlogix were up 9.5% to $.46 cents.