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Kuoni Buys Gullivers Travel To Boost Online Business

Swiss travel group Kuoni said on Monday it had agreed to buy online travel services company Gullivers Travel Associates for $720 million, expanding its available online travel services.

Kuoni said it would use available cash resources, new long-term debt facilities, and equity raised through a discounted share offering to finance the acquisition from privately-held, New York-based Travelport.

"In acquiring GTA, Kuoni is investing in one of the fastest-growing business segments within the tourism industry," said Kuoni Chief Executive Peter Rothwell in a statement.

Kuoni said it had secured credit facilities of 600 million Swiss francs, and would look to raise around 250 million francs in the rights offering.

"A real game changing acquisition for the company and we expect the market to react generally positively. The price looks reasonable and it strengthens the company's destination management business", Jon Cox, analyst at Kepler Capital Markets, said.

Gullivers Travel 2010 net revenue totalled $294 million, a 10 percent rise on the previous year, while adjusted operating profit surged 42 percent to $84 million.

The transaction price, which includes $15 million in net cash, is at a multiple of 8.4 times Gullivers Travel 2010 operating earnings.

Credit Suisse is acting as financial adviser to Kuoni, and will lead the capital increase.

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