Penningtons Solicitors LLP has advised the Travel Trust Association group (TTA) – the largest body of independent travel agents and tour operators outside ABTA - on its acquisition of Worldchoice UK Limited. The combined group will be a powerful force in the independent travel sector, representing nearly 900 outlets and bringing additional benefits to both TTA and Worldchoice members.
The TTA group (http://www.traveltrust.co.uk) has over 400 members and provides financial security for customers and travel suppliers through its unique insurance backed trust structure (a successful alternative to ABTA bonding), and access to products and services negotiated with TTA's business partners. TTA operates from its head office in Woking. Worldchoice is a similar membership organisation for travel agents with over 400 members nationwide and is a well known and trusted brand.
As Worldchoice had over 600 shareholders, it was not practical to complete the acquisition by the normal private treaty method. Instead it had to be structured through a court approved scheme of arrangement under section 895 of the new Companies Act (the Companies Act 2006). Once both the Worldchoice shareholders and the court had approved the scheme, the existing shares in Worldchoice were cancelled and new Worldchoice shares allotted to TTA. In return, the former Worldchoice shareholders received £2.75 for each cancelled share.
The total purchase price for the transaction was £4.5 million and was funded by the Royal Bank of Scotland Plc, TTA's long standing bankers.
While schemes of arrangement are becoming a more favoured method of acquiring public listed companies, they are still relatively rare in a private company context. They are also an attractive alternative to the normal takeover offer route, not least because of the lower threshold required to acquire total control of a company - 75% under a scheme compared with 90% under a takeover offer. (In this deal the scheme was approved by an emphatic 99.98% of the voting Wordchoice shareholders!)
Philip Stephenson, corporate partner in Penningtons' Business Services Division, led the legal team advising TTA. Philip commented: "This was a key acquisition for TTA. The scheme of arrangement structure presented a number of challenges along the way and we are extremely pleased to have helped TTA to navigate this unusual route to a successful conclusion."
Todd Carpenter, founder of TTA, said: “I am delighted with the completion of this important acquisition and the growth and opportunities it will bring for TTA. Worldchoice is an ideal partner to facilitate our future business plans, and will enhance and increase the services we offer to an ever growing customer base."