FLT a takeover target?

Any thoughts on takeover speculation for FLT?

Flight Centre [ASX:FLT] could interest private equity, the Australian Financial Review reported, citing analysts at CLSA. The CLSA analysts noted that Flight Centre may be a takeover target and could attract private equity, which could easily secure savings by rolling back the group’s overseas growth and closely controlling costs.

The report said that one problem for potential buyers could be convincing insiders to part with the business. CLSA noted that insiders currently control 46% of the business.

Meanwhile, the paper also noted that Macquarie analysts have speculated that Flight Centre could improve its valuation by closing 20% of its stores. Macquarie analysts said that closing the stores could see the group’s valuation increase from AUD 25.45 per share to AUD 32.30 per share, despite one-off costs associated with the closures.

The Macquarie analysts also noted that Flight Centre could add value by acquiring Webjet [ASX:WEB], which has a market value of AUD 1.08bn (USD 817bn). Macquarie noted that paying a 25% premium to buy Webjet could be 2% earnings accretive for flight centre, assuming AUD 25m in yearly synergies, with 60% of the deal financed with debt.
Flight Centre recently downgraded its full-year earnings forecast for the fourth time in the last two years, the paper noted.