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Tourism Holdings buys US campervan firm

NZ Newswire logoNZ Newswire 20/12/2016 Tina Morrison

Tourism Holdings is buying US campervan rental and sales business El Monte Rents to expand its operations in the world's largest recreational vehicle market.

The $US65.3 million acquisition, for an enterprise value of $93.5 million including transaction costs, will be funded through $82.2 million of debt from its existing lenders and through the issue of 3.4 million Tourism Holdings shares.

Tourism Holdings will also invest $US6m in North American road travel app Roadtrippers USA, which will acquire its existing Geozone travel app business, and expand its online Mighway rental platform in the US in the first quarter of calendar 2017.

For Tourism Holdings, the acquisition of El Monte will elevate it to the second-largest RV rental operator in North America behind rival Cruise America without increasing overall fleet numbers which could dent prices.

El Monte allows Tourism Holdings to develop a broad-based RV rental and sales business in the US, similar to its New Zealand business, and its mix of international and domestic customers and older fleet is complementary to Tourism Holdings' smaller and more premium Road Bear operation in the US.

"This is a much lower risk strategy than trying to grow to an equivalent market share from the Road Bear platform," said Tourism Holdings chief executive Grant Webster.

Tourism Holdings estimates it will have a 28 per cent share of the RV rental fleet market after the purchase, compared with Cruise America's 52 per cent.

Tourism Holdings said the purchase of El Monte means it is well positioned as the global leader in RV rentals, as it reorientates further towards the northern hemisphere.

"We are making the right steps to be truly global in our platform," Tourism Holdings chair Rob Campbell said. "We still see opportunities in other operating markets, such as Europe, at the right time."

The purchase of El Monte is due to settle on January 6, and Tourism Holdings said the business will post a loss during the first six months, primarily due to the low season.

It will release its first-half earnings in late February, and expects net profit to rise to $11.1m from $8.2m in the year earlier period, ahead of its October forecast for $9.5m.

For the full year, Tourism Holdings expects to post a profit of $27m, down from its earlier forecast for profit of $27.5m-$28.5m, which reflects the impact of the transactions. It has set a goal for annual profit to reach $50m in 2020.

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