The Corporate Travel Management Ltd (ASX: CTD) share price has pushed higher on Wednesday after it responded to market speculation.
At the time of writing the corporate travel specialist's shares are up 2% to $24.88.
What happened?
This morning Corporate Travel Management acknowledged an announcement made by Capita PLC regarding an unsolicited approach by the company for Capita's travel businesses.
According to Capita's announcement, the UK-based business confirmed that it received an unsolicited offer for its travel businesses from Corporate Travel Management several weeks ago. But given "the stage of discussions, which are ongoing, there is no certainty that the disposal will complete or of the transaction consideration."
In its response this morning, Corporate Travel Management advised that it continues to evaluate a number of potential acquisition targets consistent with its stated strategy. It confirmed the approach and reaffirmed that discussions are at an early stage and "there is no certainty as to whether a transaction will be agreed nor as to the terms or timing."
What now?
Considering Capita is known to be interested in selling non-core assets in order to simplify its business after a downturn in its performance, this seems like it would be a mutually beneficial deal.
However, until a deal is agreed and terms are revealed, it is impossible to judge the merits of the potential acquisition. For now, I would suggest investors keep their powder dry and wait for something more concrete before acting on the news.
In the meantime, I see a lot of value in the shares of a couple of the company's industry peers. My preference right now is online travel agent Webjet Limited (ASX: WEB), followed by integrated travel company Helloworld Travel Ltd (ASX: HLO).
I believe both company's shares are trading at fair prices given their current growth profiles and, importantly, are not being targeted publicly by short sellers.
