December 2, 2015 – Gategroup Holding AG announced today it has reached an agreement with funds advised by Triton to acquire 100% of IFS, complementing its existing business and strengthening its position in buy-on-board services. According to Gategroup, the acquisition, which entails a debt-free purchase of CHF 130 million (US$126.5 million), will generate additional revenue of more than CHF 240 million (US$233.6 million) and EBITDA of CHF 13.4 million (US$13.04 million).
IFS is a leading airline buy-on-board provider in Europe, with a focus on the Nordic and Baltic regions. Based in Sweden, the company employs approximately 300 people across five countries. The company supplies buy-on-board services in the Nordics, providing versatile retail service solutions to airlines, ferry and cruise lines.
The IFS transaction is subject to the approval of the Polish antitrust authorities, with closing expected in February 2016. The purchase price reflects a post-synergies multiple of 6.5-times EBITDA. Targeted annual run-rate cost synergies of about CHF 6 million (US$5.84 million) between Gategroup and IFS are based on cost of goods sold efficiencies and integration of support functions, and will be realized in the next 18 months during the post-acquisition integration phase.
Additionally, the integration of the IFS business into Gategroup will drive commercial improvements, as Gategroup predicts it will become the leader in buy-on-board services in terms of size, number of customers, business intelligence (with data comprising purchasing preferences of more than 175 million passengers worldwide), and on-board technology. This will also mean the acceleration of POPS, Gategroup’s automated and pre-order and pre-selection technology that enables airlines to implement and deliver a modern onboard shopping experience to passengers, driving efficiencies and revenue opportunities. Buy-on-board is a key segment, as today about 50% of short-haul traffic in Europe derives from low-cost carriers with no complimentary food service.
The transaction is expected to be 12% accretive in cash earnings per share (EPS) in year one, and 16% in year two, including run-rate synergies. The acquisition will be fully financed through drawing under Gategroup’s existing facilities.
“Gategroup’s growth and the enhancement of our buy-on-board offering coupled with an on-track delivery of efficiency gains and cost savings are key pillars of our Gateway 2020 strategy,” said Xavier Rossinyol, Gategroup CEO.
“We are very pleased to have found a service provider in IFS that shares our focus on innovation and efficiency, with the flexibility to quickly adapt within the ever-changing world of the airline industry and with a common goal to provide the best possible offering to customers. This transaction, therefore, represents much more than an accretive acquisition: It is a clear step forward in creating the largest buy-on-board operator in the industry, leading commercial innovation, knowledge of customers and technology as well as to accelerate ancillary business generation for the airlines whilst significantly enhancing passenger satisfaction.”