Tui Travel has moved to become a global leader in adventure travel by creating a joint venture with Australian-based specialist Intrepid Travel.
The deal is expected to lead to £10 million in cost savings a year in the first three years, primarily arising from increased economies of scale.
The combined businesses will operate a multi-channel and multi-brand strategy and will provide new opportunities for growth including new products, distribution channels, source markets and destinations, Tui said.
It will be 60% owned by Tui Travel and 40% owned by Intrepid Travel’s private shareholders. Completion of the deal, announced this morning to the City, is expected by May.
The board of the new venture will be chaired by John Wimbleton, managing director of Tui Travel’s Specialist & Activity Sector. Darrell Wade, chief executive and co-founder of Intrepid Travel, will become chief executive of the joint venture.
The transaction is based on an injection of businesses into the venture by both parties and has no cash component. Melbourne-based small group adventure travel operator Intrepid Travel handles more than 100,000 passengers a year from around the world.
The company had revenues of £69.4 million and profit of £5.3 million in the year ending June 2010.
Tui Travel’s adventure businesses are part of its Specialist & Activity Sector and comprise a portfolio of businesses in the UK, Australia, North America and Holland and carry over 240,000 clients a year. They had revenues of £185.3 million and a profit of £6.8 million in the financial year ending September 30 2010.
Tui Travel chief executive Peter Long said: “Specialist travel is an important part of our business and one of our key drivers of growth due to strong margins and development opportunities.
“This deal with Intrepid Travel will significantly enhance our position in the fast growing adventure travel sector. We believe this venture has great potential for value creation through the increased scale, synergies and growth of the combined businesses.”