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Despegar, the Argentine travel group that controls Decolar, has increased its efforts to grow in Brazil. In the last three years, of the five acquisitions made, three were in Brazil, said Marcelo Grether, the company’s chief M&A and new business officer. In total, about $22 million were invested to bring Brazilian businesses to the group. The most recent one was the acquisition of ViajaNet, an online tourism agency, for nearly $15 million – the largest purchase to date.
“ViajaNet is a 13-year-old company that knows a lot about technology, which is key for us. We aim to grow a lot in Brazil, acquire more companies and look for deals. And this is a company that, along with Koin [a platform partly owned by Despegar since 2020] will help Decolar to be more important, relevant and competitive,” he told Valor.
Under the terms of the agreement signed to buy ViajaNet, 60% of the purchase price will be payable at closing; 20% in 24 months after the acquisition, and the remaining 20% 36 months after the acquisition. To move forward with the deal, Decolar was advised by law firm Tauil & Chequer Advogados, while ViajaNet was advised by Kroll Corporate Finance.
The talks involving the sale of ViajaNet were first reported by Valor in January. The news then was that the crisis caused by the pandemic in the industry has put the travel agency business in jeopardy and encouraged several mergers and acquisitions in recent months, such as that of Flytour and Queensberry. In January, Valor reported that ViajaNet would be the next and that Decolar was interested in cutting a deal.
ViajaNet reported audited revenues of nearly $30 million in 2019. During 2021, ViajaNet’s online sales accounted for 98% of total sales, with 88% of gross bookings originated in the B2C channel and the remainder via the B2B channel. In addition, 98% of gross bookings were within the air segment of Brazil’s travel market. According to Decolar, this gives the company the opportunity to cross-sell its portfolio of lodging and other travel products to ViajaNet’s customers.
Both companies will maintain their brands and work independently in their commercial management. The closing of the transaction is expected to take place in the second quarter of 2022.
Despegar remains on the lookout for acquisition opportunities, moves that have been encouraged by the crisis caused by the pandemic in the industry, Mr. Grether said. “Three things are important to us in acquisitions. One is the location – our focus is on Latin America, especially Brazil. The companies must add value, with great synergies. In addition, integration is as important as the purchase. When we buy something, it has to be something that adds synergy quickly.”
The company has seen a firm recovery in demand, especially after March, when the omicron variant of coronavirus started to affect the tourism industry, the executive said. He declined to elaborate citing that the group will report results next week.
The company reported revenue of $124.6 million in the fourth quarter, up 134% year over year, but 14% below pre-pandemic levels. The group also saw net loss of $10.7 million in the quarter, compared with $28.8 million a year earlier.
Source: Valor International