Lastminute.com to be purchased for $1.07bn

[Marketing Guy]

BBC news article: Travelocity seals Lastminute deal (http://news.bbc.co.uk/2/hi/business/4539253.stm)

Online retailer Lastminute.com has agreed to a £577m ($1.07bn) takeover bid from Sabre Holdings, owner of the Travelocity online travel business.

The takeover deal must be approved by Lastminute shareholders.

Worth $1billion? Certainly a well know brand and surviver of the dotcom bubble days, but £1bn?

Travelocity have done quite a lot of conventional advertising over the past few years - gonna be a big merger for them.

MG

[PhilC]

Does Lastminute make a profit yet? The last I heard they were only losing about £4 million a month (or quarter) and they said they were on target! That was a few years ago though, and after the stupidy of their public offering.

[Marketing Guy]

Nope they are still running at a loss afaik.

[PhilC]

The dot com bubble never really burst then, as there are still some people with vivid imaginations. It's always amazed me how some people see web-based businesses in the same way that they see bricks 'n' mortar businesses. How much would a bricks 'n' mortar business sell for if it had never run into profit? And yet the b&m business is far more stable because competitors can't usually set up next door to it. Anybody can come along and compete with any web-based business and win quite easily. It's just not the same as brick 'n' mortar. With a business like Lastminute, anyone can compete and win from home!

[Marketing Guy]

True but they do have a very large B and M presence as well, hence the value. Taken in context, their annual losses aren't so bad - didn't they get hit hard when the bubble burst and are now on an upward trend, allbeit one still in the red?

MG

[PhilC]

I'm sure they are in a building, but they aren't all over the country like Thomas Cooks, or are they? I always thought they were just a web-based company.

[Marketing Guy]

Seem to recall they had quite a substantial amount of staff - i think they have some airport booth / office type things - I would suspect they have some regional branches as well.

[PhilC]

Fair enough, but I still don't see the business logic in paying over a billion dollars for a company that's continually lost money. The bricks 'n' mortar places are only rented, and are not assets.

[Marketing Guy]

Indeed - presumeably the potential is a lot greater than the reality. They do have strong brand presence, and I would assume they have a great deal of repeat custom and a very large DB of customers.

That would be very valuable for a largish travel firm to capitalise on and keep in mind that although LM.com is making a loss on it's own, it could be a very profitable part of a larger (related) organisation.

That's the theory anyway - who knows if will work that way. Similar situation to the AJ purchase a few months ago - initial value may be much less than the paid price, but potential and long term plans could be a huge factor.

MG