Wednesday, November 4, 2009 1:06 PM
Groupe Aeroplan opens door to U.S. markets
Andrew Willis
Customer loyalty market leader Groupe Aeroplan opened the door to U.S. expansion this week with a relatively inexpensive $175-million purchase of Carlson Marketing.
A dominant player in the domestic market, former Air Canada unit Aeroplan AER-T is now using acquisitions to expand outside the country. Carlson, first and foremost a hotel and travel company, opted to narrow its focus.
In looking at the deal from Aeroplan’s point of view, analyst Perry Caicco at CIBC World Markets said in a report: “The acquisition is an intelligent diversification of the business, taking it 'upstream' in loyalty and marketing management and adding numerous new clients and geographies.”
Owning Carlson “could provide opportunities for expansion of Aeroplan's core business,” said Mr. Caicco.
Deutsche Bank and RBC Dominion Securities advised Aeroplan on the purchase, while Petsky Prunier Securities worked with Carlson.
That $175-million price tag on Carlson amounts to a relatively low multiple of 4.5 times its earnings before interest, taxes, depreciation and amortization, or EBITDA.
“Businesses like this sell for low multiples because the main assets are the people, who can theoretically walk away with clients and relationships,” said Mr. Caicco.
