The Motley Fool

Is this acquisition good news for Skydive the Beach Group Ltd?

Skydive the Beach Group Ltd (ASX: SKB) is aiming to become the largest adventure tourism group in the world.

That’s quite an ambition, but at least the company appears to be on the right track.

Originally a pure skydiving company, Skydive the Beach took its first baby step outside the skydiving sector with the acquisition of Raging Thunder Adventures, an adventure tourism company based in Cairns, Queensland.

Do you think there’s a name change on the cards?

The acquisition will cost Skydive the Beach $15.45 million, and is expected to add earnings before interest, tax, depreciation and amortisation (EBITDA) of $3 million per year.

Raging Thunder Adventures offers four main activities in the region, including white water rafting, canyoning, hot air ballooning and Great Barrier Reef cruises and activities. Cairns also happens to be Australia’s largest adventure, leisure and travel destination according to Skydive the Beach.

Interestingly, Skydive the Beach shares some similarities with Sealink Travel Group Ltd (ASX: SLK). While both operate in the travel industry, Sealink is focused mainly on owning and operating commercial ferries as well as ferry tours including Captain Cook Cruises. Sealink also owns and operates a number of businesses on Kangaroo Island in South Australia – but also happens to operate the only ferry to and from the island.

Interestingly, Flight Centre Travel Group Ltd (ASX: FLT) is also diversifying into tourism operations from its core business of being a travel agent, including adventure travel.

But Skydive the Beach will have plenty of competition from around the world. Adventure tourism is one of the fastest-growing segments of the travel industry according to one source.

Foolish takeaway

Skydive the Beach could end up being acquired by another adventure travel company – particularly one looking to expand operations in Australia. I’m not sure it would be on Flight Centre’s radar just yet though.

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Motley Fool writer/analyst Mike King owns shares in Flight Centre Travel Group. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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