Report

eDreams Odigeo : Smooth landing for PE owners?

>eDreams Odigeo (Odigeo) is reviewing strategic options - Odigeo announced yesterday that it is reviewing various strategic options including a potential sale process, in order to maximise value creation for the benefit of all its stakeholders. The decision was prompted by unsolicited indications of interest from potential investors. The process is said to be at an “early stage” with no certainty about the level of interest of potential investors or the attractiveness of any potential formal proposal that may be submitted. Morgan Stanley has been appointed to advise Odigeo’ Board for the strategic review process.Current interest for the industry should support a full exit of current PE shareholders - PE firms Ardian and Permira contributed their OTA assets to form eDreams Odigeo in June 2011. Their aggregate ownership decreased from 81.2% to 49% following Odigeo’s IPO on the Madrid stock exchange in April 2014. They cashed in EUR 313m of gross proceeds from this transaction (30.5m shares sold at a price of EUR 10.25). The investment horizon for PE investments is usually 3-5 years but a potential full exit was delayed by Odigeo’s poor operating performance post IPO. Ebitda should only recover its 2013/14 level of EUR 119m this fiscal year. Recent deals (such as etraveli’s acquisition by CVC for an EV of EUR 508m) illustrates investors’ interest for the sector and Odigeo could potentially attract bids from PE firms and industry players such as Expedia (Ba1/BBB-), Priceline (Baa1/BBB+) or Ctrip (unrated).We are maintaining our Positive credit opinion and our Buy recommendation on the 2021 notes at this stage - At this juncture, we are confirming our Positive credit opinion based on Odigeo’s de-leveraging trajectory, which is reinforced by the upgraded guidance. In a change of control scenario, the agencies’ ratings and our opinion will largely depend on the financial profile of the acquirer and the pro-forma net leverage.We keep our Buy recommendation on the 2021 secured notes, given the generous Ytc of 1.9%, assuming a call on or around 1 August 2018 at 104.25% (and 1.5% factoring in the likely exercise of the 10% redemption clause at 103%). The bond could benefit from a sale to a better rated competitor, although the upside potential is constrained by the early redemption provisions. In the scenario of an acquisition by a PE firm, a refinancing of the 2021 notes remains likely given their high coupon (8.5%). There is no portability provision in the CoC clause of the bond documentation.
Underlying
EDreams ODIGEO SA

eDreams Odigeo SA is a Luxembourg-based company principally engaged in the travel and recreational services. The Company is a travel group composed of various brand names, such as eDreams, GO Voyages, Opodo, Travellink, Liligo and Budgetplaces. It offers flights, cruises, car rental, travel insurance, as well as short and long-stay packages. It provides online travel services, including booking of scheduled, charter and low-cost flights, hotels, self-catering accommodation and cruises, traditional and non-traditional package holidays, car hire, train tickets and bus tickets, as well as travel insurance; corporate travel; white-label services, which allow access to various Web platforms; media services, such as targeted advertising, and venture farm to invest in companies with different types of business models and technologies.

Provider
Oddo BHF
Oddo BHF

​Oddo Securities provides securities brokerage and research services. The company offers equity, economic, and derivatives research and credit analysis services. It focuses on insurance, automotive, building materials, pharmaceuticals, telecommunications, information technology, and agri-food industries.

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