Internet Business Group (IBG) has spent more than £1m to acquire a number of non-flight assets from Cheapflights Ltd.

Published: 06 Jul 2006

Internet Business Group (IBG) has spent more than £1m to acquire a number of non-flight assets from Cheapflights Ltd.

The transaction sees the transfer of the www.cheapholidaydeals.co.uk, www.cheapaccommodation.com websites to IBG as well as a portfolio of domain names including Cheapshortbreaks.com.

Payment is being made in a combination of cash and shares. As per the information available, the payment will consist of 355,000 stg in cash and 745,000 stg in IBG shares. As a result of this transaction, Cheapflights Ltd will hold 2.98 pct of IBG’s enlarged share capital.

The two companies are to work closely to transition the operations over the course of the next two months.

According to The Independent, eyebrows were raised when IBG unveiled its £1.1m purchase of cheapholidaydeals.co.uk and cheapaccommodation.com, as well as other “cheap” addresses. Maziar Darvish reportedly dismissed concerns that the deal was anything but cheap. “That perception is understandable but this is a strategic acquisition,” said , the chairman and chief executive of IBG. “I agree that in their own right, domain names are worthless,” he added.

Darvish said: “This transaction has significant strategic value for the company... IBG now offers a very broad and exciting mix across the sector and this acquisition further consolidates the company's expertise within travel.”

He reportedly said that the current sites already generate hundreds of thousands of pounds worth of advertising revenue and that once IBG replaces the current web sites with its own, it expects usage and revenue to grow rapidly.

The sites generate revenues when users click through to book a holiday or hotel and IBG, which has its own holiday price comparison site called www.henoo.com, intends to also sell adverts on the sites.

David Soskin, chief executive officer, Cheapflights said, “This transaction enables us to focus on our core flights price comparison business in the UK (www.cheapflights.co.uk); to continue the company’s hyper-growth in the USA (www.cheapflights.com); and to devote resources to our planned international expansion.”