Flight Centre share price rockets 15% as ASX 200 travel stock resumes trading

The ASX 200 travel stock was placed in a trading halt yesterday pending its $180 million share placement.

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published February 1, 2023 10:52 am AEDT

The Flight Centre Travel Group Ltd (ASX: FLT) share price is rocketing higher on Wednesday, up 14.84% in early trade.

The S&P/ASX 200 Index (ASX: XJO) travel stock closed on Monday trading for $15.83. The share price shot as high as $18.18 this morning and, at the time of writing, is $17.54, up 10.8%.

The company was placed in a trading halt at its request yesterday.

A girl runs with model plane in a park with her parents in the background lying on the grass watching her. — Image source: Getty Images

Why was the Flight Centre share price halted?

As The Motley Fool reported yesterday, Flight Centre shares entered a trading halt following the company's announcement that it will acquire United Kingdom-based luxury travel brand Scott Dunn.

Commenting on the acquisition yesterday, Flight Centre CEO Graham Turner said, "High-net-worth, time poor customers highly value the services of Scott Dunn as shown by their customers' loyalty."

Flight Centre will shell out $211 million for Scott Dunn, comprising of $40 million in cash and a $180 million placement. That placement comprises of some 12.3 million new shares, issued for $14.60 apiece.

Additionally, Flight Centre will conduct a $40 million share purchase plan (SPP), offering existing stockholders shares at the same placement price.

What did the travel group report today?

The Flight Centre share price is out of the trading halt and roaring higher after the company reported that the $180 million share placement is complete.

The company said demand for the institutional placement – issued at a 7.8% discount to Monday's closing price – exceeded the supply of 12.3 million shares.

"We are very pleased with the support shown by new and existing institutional investors for the placement," Turner said. "The acquisition of Scott Dunn will enable us to grow our leisure presence in the attractive US and UK luxury markets, complementing our existing footprint."

Investors who held shares at Monday's close will have the opportunity to apply for up to $30,000 worth of Flight Centre shares for $14.60 apiece or 2% discount to the volume-weighted average share price over the five trading days up to, and including, the SPP closing date. (Whichever is lower.)

Flight Centre share price snapshot

The Flight Centre share price has been a strong performer so far in 2023, up 25% since the closing bell on 30 December. Over the past 12 months, as you can see below, shares are up 3%.

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