Guest Pitch: Webjet Group (WJL:AX)

A bet on takeover talks resuming: 30%+ upside (at A$0.50)

This pitch was shared by Giorgi.

I think it’s time to revisit Webjet Group. The stock is at all-time lows, sitting 45% below recent takeover bids. Meanwhile, the latest developments suggest that talks could restart soon. I wrote up WJL 10 months ago (see the guest pitch here), so please refer to that for background on the company and the buyout saga. I’ll keep the recap below brief.

Webjet Group is a dominant online travel agency in Australia. Last year, it ended up in the crosshairs of two potential acquirers. One is a consortium led by BGH Capital, a top Aussie PE firm, alongside corporate raider Garry Weiss. In May, the group built an 11% stake and submitted an A$0.80/share offer, which was quickly rejected as too low.

The other suitor was brick-and-mortar travel agency Helloworld, which around the same time built a 15% stake and reportedly made a private approach to Webjet regarding a merger. WJL wasn’t very receptive to that idea either.

The stock quickly parked at A$0.90/share and stayed there for many months as the market priced in a higher bid from BGH and/or a potential bidding war with Helloworld. Importantly, both parties kept buying shares at that level in the open market, reinforcing the expectations.

In November, Helloworld finally made a public A$0.90/share bid. The offer was timed just a week after WJL’s weak interim earnings report and guidance cut for FY26 (ending in March). BGH responded immediately by lifting its stake to 18.3%, buying stock near 90 cents again, and raising its own offer from A$0.80 to A$0.91/share. WJL opened its books to both parties for three months.

At the end of the due diligence period in February this year, WJL announced it was ceasing discussions with both suitors. Apparently, the board did not have “sufficient certainty that a binding proposal that is capable of being recommended by the Webjet Board will be received from either party”. The board also noted that it remains open to further engagement on proposals that offer “compelling value” and “sufficient certainty of execution.” The FY26 EBITDA guidance was cut again by 8%.

The market, already worn out by this saga, has apparently given up on a takeover. The stock fell from A$0.80–A$0.90 to A$0.50/share, back to all-time lows last seen in the aftermath of the spin-off from Web Travel Group.

But the market may have overreacted, as several interesting developments have followed since:

• March 17: Helloworld bought nearly 5m additional WJL shares at an average price of A$0.56/share, taking its stake from 17% to 18.3%.
• March 27: The CEO of WJL’s OTA segment, which makes up 86% of total revenue, stepped down after 10 years of tenure.
• March 30: WJL’s managing director and CEO resigned.
• March 30 – April 1: Several media outlets (AFR, The Australian, Sydney Morning Herald, Travel Weekly) reported renewed takeover speculation from analysts and industry observers. One analyst noted, “I’d be surprised if it wasn’t taken out by the end of the year.”

I think both BGH and Helloworld remain interested in WJL. The way the February announcement on the termination of talks was worded suggests the issue was not a loss of interest from the bidders. The process was terminated solely by Webjet. Neither of the bidders has commented or indicated that it is no longer interested in WJL, as is typical after talks fully break down post due diligence. Instead, Helloworld bought more shares just a month later.

My read is that during due diligence both bidders started pushing for a lower offer, likely in response to the worsening business outlook. Management was not willing to accept it, and then simply used it as an excuse to end the process.

I wouldn’t be surprised if the CEO, who has just resigned, was one of the main opponents of a takeover. She was brought in two years ago to oversee WJL’s spin-off and a five-year business revitalization plan. As I understand, this was a major step up in her career, so it makes sense she would not want to sell so early. In fact, the February announcement made it clear that the company viewed the takeover process as a distraction and preferred to refocus on execution of the five-year plan.

BGH tried to install its nominees to the board last year by calling a special meeting, but the proposal did not pass, potentially due to Helloworld’s opposition. The key point is that the suitors appear willing to go active and already have meaningful leverage over the board. With the annual meeting approaching (last year’s was in August), it’s quite possible they have been ramping up pressure behind the scenes.

At a high level, WJL’s valuation looks compelling, and it is not hard to see why BGH, Weiss, and Helloworld are interested (though I said the same thing last year). Webjet has A$134m of net cash, covering more than half of its market cap. The stock now trades at just 3x FY26 and 2x FY25 underlying EBITDA (after SBC), down from around 6.5x during the early stages of the saga. Global OTAs such as Booking and Expedia trade at much higher multiples. Both BGH and Helloworld are sitting on cost bases 50-60% above current levels.

For Helloworld, this would be a highly strategic deal, effectively giving it an online presence. Media reports previously suggested that Helloworld was pitching significant synergies to WJL. As one analyst noted recently, “Strategically, they’ve got more to lose if they don’t do a deal… their business model is more precarious, and they improve their quality by moving more online. They may even overpay but it might still be worth it.”

One final point. The company also appears to have paused its buyback, which could be another signal that buyout discussions have resumed. WJL announced an A$25m program in February, bought a decent chunk of shares between March 2 and March 9, and then stopped, even as the share price moved lower. Last year, the buyback had also been suspended for a while due to takeover interest from BGH.

Putting it all together, there is a good chance something interesting will happen here in the near term. If talks resume or a new offer emerges, the stock should go up. The next offer would probably come in below the prior one, but given where WJL trades, there is still plenty of headroom above today’s prices.

BGH and Helloworld both hold blocking stakes, so any deal would likely require one of them to step aside or for the two to work together. There were earlier rumors of a possible joint consortium, but nothing has materialized so far in that regard. In any case, the thesis does not rely on a full takeover. A renewed offer or a resumption of talks would be enough to move the stock. A bidding war or a completed deal would be bonus upside.

There is also one additional cautionary point that needs to be highlighted.

Annual results are expected next month, and the business has become a black-box lately. Management has provided little explanation for the latest two guidance cuts, but there are clearly a number of different headwinds at play. On top of ongoing macro pressure and lower demand (which is what management constantly emphasizes), there is now AI-driven search disruption and the impact of the Iran war, which has pushed fuel prices higher. Visibility into how calendar 2026 is shaping up remains limited. Some Australian airlines have been cancelling flights and raising prices, yet WJL’s management noted a few weeks ago that customers are not cancelling trips this year, but are shifting from long-haul travel to short-haul Asia and domestic routes. So it is hard to say what kind of outlook we can expect for FY27.

Here’s how guidance for FY26 has evolved:

• August 2025: underlying EBITDA guided flat vs FY25.
• November 2025: cut to A$30m-A$32m (excluding a negative A$0.6m-A$0.9m impact from a recent acquisition).
• February 2026: cut further to A$28m-A$30m (with the same A$0.6m-A$0.9m exclusion).

The latest update came in February, before the Iran war. March still falls within FY26, so there is a chance final numbers come in slightly lower, though likely not by a meaningful amount. The bigger question is the FY27 outlook. If that disappoints, there could be additional pressure on the stock. That said, valuation already looks undemanding, and Helloworld, a well-informed industry player, was buying shares just two weeks ago at a 12% premium to current levels, which offers some reassurance on WJL’s valuation.