Australia-based Corporate Travel Management acquired 60-year-old California-based agency Montrose Travel for a "base consideration" of $34.3 million, the companies announced Friday.
The acquisition establishes "a Californian hub" for CTM's U.S. business and propels it to "one of the 12 largest travel companies in the country," the company claimed. Including projected sales from Montrose, CTM expects annual transaction value in North America to surpass $750 million.
Montrose is owned by president Joe McClure; his wife and CFO Julie McClure; and his sister Andi McClure-Mysza, president of host agency MTravel. The three took ownership of the company in the early 1990s and grew it from 14 employees to well over 200 and from around $4.5 million in annual sales to more than $270 million.
Montrose targets corporate accounts ranging from $500,000 to $5 million in travel spend. In addition, the company operates in the leisure, group, meetings and incentive areas.
Montrose also has a significant Loyalty Rewards division that manages travel fulfillment for financial institutions, representing "some of the largest credit card rewards programs in the world," according to McClure.
CTM's move into the loyalty rewards space in Australia first sparked the dialogue with Montrose, McClure noted via email to The Beat.
The California agency had entertained options with "several acquirers" in the past year-and-a-half, he noted. Montrose owners liked the culture fit, among other aspects of CTM.
The companies now are addressing the integration plan and "will peel the onion one layer at a time moving forward, and we will integrate where it makes sense to create efficiencies and to cross-utilize our existing resources."
McClure added: "For the foreseeable future, it's business as usual."
The company will assess go-forward branding business line by business line, McClure noted. For example, Loyalty Rewards may remain, while Montrose's corporate travel business may rebrand under the Corporate Travel Management umbrella.
Montrose directors and the management team will remain in their roles, noted McClure. He assured Montrose employees that they "are all secure and will be staying. Everybody in our entire organization is excited and ready to take our next leap and write our next chapter."
McClure is bullish on Montrose's growth opportunity as part of CTM. "We already have plans to use CTM to take both our corporate and loyalty businesses global. They also have a strong network of independent contractors that align well with our program, so that line of business is sure to explode." He also noted that the leisure, groups, meetings and incentives businesses "will be equally supported by the infrastructure CTM already has in place."
Asked about Montrose's affiliation with the Radius agency network, McClure noted, "We are in discussions with Radius and will see how that plays out."
CTM disclosed it would fund 20 percent of the acquisition via stock to Montrose's owners and the remainder via "a mixture of U.S.A. operating cash flow and USD denominated short-term debt." The deal takes effect Jan. 1.
CTM entered North America in 2012 with the acquisition of Polk Majestic Travel and has been buying ever since: TravelCorp in 2013 and Alaska's USTravel, Houston-based Avia International Travel and D.C.-area Diplomat Travel in 2014. CTM also moved in Europe by acquiring United Kingdom-based Chambers Travel Group in January of this year.