The Corporate Travel Management Ltd (ASX: CTD) share price will be one to watch on Friday when it returns from its trading halt.
This follows news that a number of leading brokers have responded particularly positively to its acquisition plans.
Why is the Corporate Travel Management share price halted?
On Wednesday, the Corporate Travel Management share price was placed into a trading halt whilst it sought to raise $100 million via a $75 million institutional placement and a $25 million share purchase plan.
The $75 million placement will be undertaken at $21.00 per new share, which represents a 5.8% discount to the Corporate Travel Management share price at the close of play on Tuesday.
The company is raising these funds after entering into a binding agreement to acquire the Australia and New Zealand corporate and entertainment travel businesses of Helloworld Travel Limited (ASX: HLO).
Based on the performance of these businesses prior to the pandemic, management expects the deal to be approximately 3% earnings per share accretive excluding synergies and 7% including full run-rate synergies.
Broker response
In response to the news, this morning the team at Macquarie Group Ltd (ASX: MQG) upgraded Corporate Travel Management's shares to an outperform rating with an improved price target of $24.70.
Based on the latest Corporate Travel Management share price, this implies potential upside of just under 11% for investors.
According to the note, the broker is a fan of the deal and believes the acquisition will be complementary to the company's existing operations. In light of this and its trading update, Macquarie has upgraded its earnings per share forecasts through to FY 2024.
Elsewhere, the team at UBS has retained its buy rating and lifted its price target to $27.75.
UBS notes that the acquisition provides the opportunity to build further scale in its core Australian operations. Overall, the broker feels the company is "well positioned to leverage the expected recovery in 2022 and beyond."
