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Webjet shares on watch as takeover speculation intensifies

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The Webjet Limited (ASX: WEB) share price will be on watch on Tuesday after takeover speculation returned.

What is happening?

In December there was speculation that the online travel agent was a takeover target of a private equity firm.

Webjet responded to the speculation, saying:

“Webjet notes recent media speculation in relation to expressions of interest in the Company. The Company’s objective is to create value for its shareholders and from time to time we consider acquisition interest in the business. Should a proposal be received that was compelling and certain, the company would put it to shareholders. No such proposal exists at present.”

However, this morning there are reports that Webjet is readying itself for a takeover approach.

Speculation intensifies.

According to the AFR, it understands that CEO John Guscic and the Webjet board were together in December to discuss how much they believed the company was worth if it pursued a sale.

This follows the purported receipt of indicative views on the company’s valuation last month from prospective buyers. These are then believed to have been discussed at the aforementioned board meeting.

Whilst the report acknowledges that it is unclear if talks have progressed any further or if due diligence has been granted, sources have revealed that Herbert Smith Freehills and MinterEllison have been appointed as legal advisers to Webjet.

This appears to demonstrate that this is more than just speculation and that something is brewing behind the scenes.

Who would buy Webjet?

Webjet is likely to be an attractive option for private equity firms that are sitting on a mountain of cash right now.

The report suggests that BGH Capital and KKR could be suitors. Though, there is also believed to be interest from Europe, with Spain’s Hotelbeds rumoured to be looking over Webjet’s fast-growing WebBeds business.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. 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 Scott Phillips.

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