According to Jefferies, the acquisition offers distinct advantages for TBO. First, it gives the company stronger access to the large outbound luxury travel market in the US, where TBO’s current presence accounts for only about 5% of gross transaction value. Classic brings with it relationships with US travel consortia and a curated network of around 1,500 luxury hotels, which will gradually be integrated into TBO Platinum, the company’s luxury platform.
Second, synergies between the two businesses are expected to unlock growth. While Classic’s revenues have been flattish in recent years, Jefferies believes TBO’s supply technology and booking engine will improve efficiency and broaden offerings. The acquisition is also expected to be earnings accretive from the near term, aided by Classic’s longer booking windows of 140–245 days versus TBO’s 60, which supports stronger working capital.
Third, despite the acquisition being priced at a relatively higher multiple of 11 times EV/EBITDA compared with TBO’s past deals, Jefferies considers the valuation justified given Classic’s premium positioning and profitability. Classic operates with a gross take rate of 22–23%, far higher than TBO’s 6%, though nearly half is paid out as commission to advisors. Even so, the EBITDA and profit contribution relative to gross transaction value are stronger than TBO’s.
Jefferies has raised its earnings estimates for TBO by 2–6% for FY26–28 following the acquisition and expects revenue and EBITDA to grow at a compound annual rate of 33–36% over this period. It added that while TBO plans to pause further M&A activity to focus on integration, the broader roll-up strategy remains intact.
Despite the 16% surge in the last one month, TBO Tek shares are down 10 percent year-to-date.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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