Quick Pitch: Tourism Holdings (THL:AX)

Merger Arbitrage: 23% Spread (at A$2.07/share)

THL is the world’s largest recreational vehicle (RV) rental operator, running a fleet of 8.6k vehicles. It also manufactures its own vehicles in-house. The stock trades on the Australia’s and New Zealand’s stock exchanges, though the NZ listing is more liquid.

THL has received a preliminary, non-binding offer from a consortium of BGH Capital and the Trouchet family at NZ$3.1/share (equivalent to A$2.55/share). The buyer group already owns 20% of THL. A further 16% of the register has indicated support, likely representing the two other major shareholders with 8% stakes each. The board is currently reviewing the bid.

The proposal was announced on May 29. The spread has gradually widened from an initial 10%-15% to 25%. Downside to the pre-announcement price is 13%, though the actual downside in a no-deal scenario would probably be larger as the takeover offer arrived alongside a weak trading update. The timing was clearly opportunistic, but in this case, it works in the buyer’s favor. I think the market may have overshot by bloating the spread to these levels.

This is already a second proposal from the same buyer group, and it comes 35% above the first NZ$2.3/share bid made a year ago, in June 2025. The board rejected it as too low, opportunistic, and coming at the bottom of the business cycle. Nonetheless, it left the door open to engage “if a significantly improved offer is provided,” and stated that it viewed THL’s value as “well north of NZ$3 per share.”

The business outlook has weakened since then. Fiscal 2026 (ending in June) was expected to be the inflection year, with earnings initially guided to jump 42%. Alongside this fresh second offer, management cut FY26 guidance, signalling that the anticipated cycle turn will be slower to materialise than previously expected.

With a sizeable takeover premium now on the table and support from the largest shareholders secured, the board has little reason to hold out for an even higher bid. I think they will either accept the current offer, or negotiate a symbolic bump. The bidder group did not indicate that the offer is final.

BGH/Trouchet consortium are serious and very well-informed buyers.

The Trouchet family are RV-industry veterans. They founded Apollo Tourism & Leisure in the 1980s, which then was combined with the old THL in a merger of equals in 2022. The family holds a 12% stake in the combined group. Karl Trouchet sits on the board of Camplify, the leading peer-to-peer RV rental marketplace in Australia and New Zealand. Few people have better visibility into the sector’s cycles. The play here is clearly to take THL private early into the inflection and capture the eventual recovery.

BGH Capital is an Australian PE firm that has been looking to expand into the travel and leisure sector. Last year, it acquired a large stake in the online travel agency Webjet Group (covered on SSI here) and made a few buyout attempts. Similarly, just before making its first bid for THL, it acquired an 8.2% stake at NZ$2.25–NZ$2.3/share, which is just slightly below the current levels. The stake was purchased from other large holders, including ANZ, ACC, and WAM. ANZ and ACC still own 8% each, and are likely behind the additional 16% shareholder support for the current offer.

What looks a bit odd is that Luke Trouchet, Karl’s brother and the last family representative on the board, resigned as an executive director of THL in March 2026. One interpretation is that the consortium could be preparing for a hostile move if the board rejects the takeover again. The offer announcement last year noted that “the consortium is also open to considering a transaction structure which results in a controlling interest but does not result in 100% ownership of the company.” That language did not reappear in the latest offer announcement (by THL), though that does not mean the option is off the table.

The current bid values THL at 16.5x FY26 underlying NPAT and 14x underlying EBIT. This is broadly in line with THL’s pre-COVID trading multiples. The more interesting number is where earnings are guided to go from here. The company projects NPAT to grow from around NZ$40m in FY26 to NZ$100m by FY28-FY29, driven by the cycle turning and ongoing business improvement initiatives. That is probably more of a mid-cycle target rather than a peak. The company generated NPAT of NZ$77m in FY23 when the fleet stood at just 7.2k vehicles. At NZ$100m NPAT, the acquisition multiple drops to 6.6x.

It took almost two months for management to respond to the first offer last year. So it might take some time now as well. We should definitely hear something before the release of annual results, expected by the end of August.

 

A bit more on the business background

THL operates an integrated build-rent-sell model: it manufactures its own vehicles, rents them out, and sells them once their rental life expires. Revenue is split roughly equally between rentals and RV sales. The company operates across New Zealand, Australia, the US, and Canada. Its unprofitable UK/Ireland division was recently divested.

THL’s RVs are manufactured in-house only in Australia and New Zealand, though as part of an ongoing business transformation, the company intends to close the Australian facility and consolidate in New Zealand, where production costs are 20% lower. In North America, vehicles are sourced directly from third-party manufacturers rather than manufactured in-house.

All of THL’s businesses, and the RV sales segment in particular, has faced a prolonged run of headwinds. Post-COVID normalization, inflation, and interest rate hikes were followed by a US market downturn, and then broader travel disruptions this year due to Middle East conflict. The company is not directly exposed to US tariffs. However, it was materialy impacted by the sharp drop of inbound US travel, which reduced the number of tourists coming to the US and renting RVs to travel around.

Management has been positioning fiscal 2026 as the inflection year. Underlying net profit after tax (NPAT) was initially expected to jump 42% versus last fiscal year, driven by double-digit rental income growth (20-30% in NZ and AU), and international travel recovery. However, the global travel disruptions caused by the Middle East conflict has worsened the outlook. The underlying NPAT guidance was cut from NZ$43m-NZ$47m to NZ$40m-NZ$43m, while year-end net debt, previously expected at NZ$400m, is now guided to NZ$465m at the midpoint.

Historical financials as well as FY26 guidance can be seen in the table below. Fiscal year ends in June.

The swelling net debt was driven primarily by elevated capex into fleet growth and investments in tourist attractions in New Zealand. The company expects a more moderate pace of investment going forward, shifting its focus from growth to utilization.