WRI examinines possibility of a trade sale as alternative to floatation

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The Irish Times also reports that online hostel booking company Web Reservations International (WRI) is examining the possibility of a trade sale of the firm as an alternative to a flotation of the business in turbulent stock markets.

Newly-installed chief executive Feargal Mooney said the firm would engage in a transaction or reorganise its shareholder base "as soon as the right opportunity presents itself", but he declined to specify a deadline for any deal or name companies that might be approached if a sale process went ahead.

Established in 1999 by entrepreneur Ray Nolan, WRI operates the hostel booking websites hostelworld.com and hostels.com and the travel search website boo.com.

While a share restructuring valued the business at some €400 million in 2006, sources close to WRI believe the €450 million valuation mooted recently is conservative, and fails to take account of its expansion since then.

Mr Mooney declined to quantify WRI's sales or profits last year, but said the growth in sales and profits in 2007 was "in line with" their expansion in 2006.

Sales grew 25 per cent to €27.23 million in 2006 and pretax profits grew by 30 per cent to €16.62 million.

The extent to which online travel firms such as Expedia, Travelocity and Priceline would be able to fund an approach for WRI is unclear at present.

WRI is understood to have spurned an unsolicited approach from a trade bidder within the last 18 months on the basis that price on offer significantly undervalued the business.

"We are, and have always been, examining options for liquidity for our shareholders. We have in the past provided liquidity opportunities and we'd hope to do so again in the future," Mr Mooney said.

Options open to the company include a trade sale, other capital market events or other corporate reorganisations, he said. "They're all on the table."

He said it was not true that the company has hired Davy Corporate Finance to advise on a flotation. He said a number of investment banks were advising the company, declined to name them and said the company has not signed any letter of engagement with any bank.

"We signed an engagement letter with Goldman Sachs in 2003 which we terminated in 2004. We haven't signed an engagement letter since."

Asked whether the exceptional volatility on stock markets meant that it would be difficult to develop an initial public offering, he said: "The markets the way they are at the moment, they wouldn't be ideal and any company hoping to go to the market, they'd like to have more favourable conditions."

However, he said there would always be an interest in attractive companies with good prospects in difficult markets.

"Does that mean that a trade sale is more or less likely? I don't know.

"Trade sale opportunities are determined by the appetite of potential purchasers," he said.

"My mandate is to execute the business plan, grow the business by increasing traffic on our websites, increase the number of properties that we work with, and look to expand into international markets, particularly Asia and South America."