Skift Take

It's hard to say how far TravelPerk can go buying the UK's Click Travel, as it limits expansion to a mostly domestic market. But then its new investor has a reputation for spotting opportunities earlier than most.

A U.S. hedge fund is helping fuel the ongoing wave of consolidation in the corporate travel sector, marking the second takeover of a UK agency this year.

Boston’s Baupost Group has backed TravelPerk’s acquisition of Click Travel, and the deal, which was announced on Tuesday, gives the Spanish startup access to 2,000 new customers, including Red Bull. But unlike another travel agency deal, TripActions’ surprise purchase of Reed & Mackay back in May, the Click Travel brand will disappear as it becomes “fully integrated” into TravelPerk.

The announcement follows yet another takeover in the mix, as American Express Global Business Travel waits for the nod to buy Egencia. No financial details on TravelPerk deal were available.

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Baupost is known for being a secretive financial company, and Seth Karlman, the man who runs it, has an investing strategy that has been described as “the best time to buy is when there’s blood in the streets,” according to one report. It’s certainly a fair assessment of the pandemic’s impact on business travel to date, particularly in the UK where the industry has called for more specific financial support.

The hedge fund has $31 billion in assets under management. Baupost provided some of the funding in in TravelPerk’s recent $160 million round, which it is now partially using for this acquisition. Terms of the deal were not disclosed.

Baupost, which was founded in 1983, has significant investments in the likes of Facebook, Google parent Alphabet and chip maker Intel. It has also stakes in several special-purpose acquisition companies (or SPACS), including Altimeter Growth Corp. 2.

Altimeter Growth Corp. 2 is chaired by longtime travel and tech investor Brad Gerstner and has Expedia founder and Zillow CEO Rich Barton on its board. It April it announced it would help superapp Grab to go public.

Baupost did not respond to a request for comment.

Acquisition Perks

Apart from a foothold in the UK city of Birmingham, TravelPerk is buying a company that has weathered the pandemic well.

While Reed & Mackay serves global organizations and higher-end travelers, Click Travel’s customers tend to include small and medium-sized companies. It has a strong domestic client base, and works with several public sector organizations, and counts some divisions of the National Health Service and police force as customers.

It reported revenues of $363 million for the year to March 31, 2020, up from $328 million in 2019. Pre-tax profits were $11 million, up from $8 million. In 2018, private equity firm BGF made a multi-million pound investment in the agency.

Click Travel also has a similar technology focus to TravelPerk. It was founded in 1999 by bothers Simon and James McLean, and early on was called, focusing on leisure travel, before moving into business travel. It launched an online booking tool in 2009.

All 150 Click Travel staff will join TravelPerk, which takes it to 650 employees. It is also TravelPerk’s largest acquisition, after buying NexTravel in January to help it expand in the U.S.

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Tags: click travel, grab, spac, spain, travel management, travelperk, uk, venture capital

Photo credit: Boston’s Baupost Group has backed Spanish startup TravelPerk's acquisition of UK agency Click Travel. Zixi Zhou / Unsplash

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