A protracted takeover of Travelzest by Canadian travel firm Red Label Vacations has been terminated as it failed to match the value of the UK operating group.
This morning’s announcement came with the disclosure that Travelzest is to dispose of all of its “underperforming” UK assets and concentrate on its Canadian operations.
The group will derive more than 90% of its revenue and profits from its Canadian operations, itravel2000 and The Cruise Professionals, following the disposal process.
The company will retain a UK base in Cheltenham which will act as an integrated operational centre for its Canadian brands, plus “certain developing UK brands” such as holiday.co.uk, flight.co.uk and upmarket brand Travelzest Holidays.
“These measures are expected to significantly improve underlying operating profits for the business by approximately £1.5 million per annum and it is anticipated that all staff currently employed in the Cheltenham operational centre will remain,” Travelzest said.
The sell-off process is underway and potential buyers were said to have been identified for a number of the businesses and brands, although further details were not given.
The company’s UK brands include VFB Holidays, naturist operator Peng Travel, Best of Morocco and Captivating Cuba.
“Further announcements as to progress with this process will be made in due course,” the company added.
Travelzest said the planned takeover by Red label, first announced in September and subject to three extensions, “significantly undervalues” the company.
Travelzest chairman Mark Molyneux said: “Following the termination of discussions with Red Label we will now focus all our efforts on generating profitable growth in order to maximise shareholder value.
“The key growth area for the company remains Canada and we will concentrate the company’s efforts in this market. Creating value for our shareholders is of paramount importance to us.
“By divesting those assets that are not performing, particularly (in the current very difficult economic climate) in the UK, which contrasts with much better conditions in Canada, we are building a stronger business that is well positioned for future growth.”