Corporate Travel Management (ASX:CTD) share price drops after raising $75m

Corporate Travel Management shares are back after their trading halt…
The post Corporate Travel Management (ASX:CTD) share price drops after raising $75m appeared first on The Motley Fool Australia. –

The Corporate Travel Management Ltd (ASX: CTD) share price has returned from its trading halt and is falling.

At the time of writing, the corporate travel specialist’s shares are down 2.5% to $21.72.

Why is the Corporate Travel Management share price falling?

Investors have been selling down the Corporate Travel Management share price after it announced the completion of the institutional component of its capital raising.

According to the release, the company raised $75 million via an institutional placement at $21.00 per new share. This represents a 5.8% discount to the Corporate Travel Management share price prior to the trading halt.

Corporate Travel Management will now push on with its $25 million share purchase plan. These funds will be raised at the lower of the placement price or the five-day volume weighted average price on its closing date.

Why is the company raising $100 million?

The proceeds from the capital raising will be used to acquire the Australian and New Zealand corporate and entertainment travel businesses of Helloworld Travel Limited (ASX: HLO) for $175 million.

This comprises $100 million in cash and $75 million in shares. The latter will be escrowed for 12 months from the date of completion.

Management believes the acquisition will be highly complementary and add industry verticals which are expected to perform strongly as the recovery from COVID-19 continues.

It also expects the deal to be approximately 3% earnings per share accretive excluding synergies and 7% including full run-rate synergies.

The response

A number of brokers responded positively to the deal. One of those was Macquarie Group Ltd (ASX: MQG). In response, the broker upgraded the company’s shares to an outperform rating with an improved price target of $24.70.

Another was UBS. Yesterday its analysts retained their buy rating and lifted their price target to $27.75.

The post Corporate Travel Management (ASX:CTD) share price drops after raising $75m appeared first on The Motley Fool Australia.

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More reading

5 things to watch on the ASX 200 on Friday

2 buy-rated ASX travel shares that could take off

The Corporate Travel (ASX:CTD) share price will resume trading tomorrow. Here’s what you need to know

ASX 200 (ASX:XJO) midday update: CSL upgraded, Westpac AGM update

Why is the Corporate Travel Management (ASX:CTD) share price halted?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Corporate Travel Management Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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