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The £1.4 billion deal to snatch up travel search engine Skyscanner is an absolute game-changer

  • Date: Monday 28th November 2016
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Sometimes there are interesting acquisitions making the business headlines – and then there are absolute game-changers.

We certainly witnessed one of the latter last week with the stunning takeover of Edinburgh-based Skyscanner for an eye-watering £1.4 billion.

Formed in 2001 by IT professionals Gareth Williams, Barry Smith and Bonamy Grimes who then went on to open an Edinburgh office in 2004, the travel search engine leader has been a true homegrown success story – a phenomenon even, with 50 million monthly users and an annual turnover of £120million.

Amazingly, it took on the likes of Expedia and Travelocity and won thanks to its consistent ability to locate the cheapest plane fares and room rates quickly and easily in over 30 languages. For so many, it continues to revolutionise the way they book travel and accommodation.

Skyscanner started off by listing budget airlines, before rapidly expanding to include most major carriers. In doing so – and this is where the true value lay – it expanded its geographical reach to include carriers to, from and within the US, Canada, Asia and most points in between.

It was perhaps no surprise when it opened a Singapore office in 2011 and a Beijing office in 2012; after all, Skyscanner was now truly an international entity. Along the way, it also made some inspired acquisitions – door-to-door travel site Zoombu and Chinese travel search engine Youbibi, for instance.

It’s interesting then that the acquisitor then in turn became the acquired last week at the hands of another Chinese company, rival Ctrip.

Skyscanner has insisted that the move won’t change the essence of the business, and that it will continue to run independently with the same management team at the helm. Ctrip meanwhile believes the deal will “strengthen long-term growth drivers for both companies”.

In the wake of the big announcement, Skyscanner CEO Gareth Williams suggested that the takeover offer had ultimately proved too attractive as it not only afforded independence, but a realisation of shared aims with Ctrip through a passion for even greater innovation in travel searches.

Or was it really just a simple case of money talks, with Skyscanner trying to explain away the basic fact of the matter?

It’s certainly tempting to see it as a true Scottish jewel in the technology crown being sadly prised from our fingers for financial gain, and subsumed under foreign ownership, never to be seen again.

Seen in another light, however, you might instead look at the deal as a huge vote of confidence in our technology sector at a time when it’s been shaken by Brexit. Effectively, our country has built a billion pound business.

The reality here is that Skyscanner grew way beyond its Scottish roots a long time ago. Across its 15 year history, it has enjoyed the investment of numerous parties and transformed into a truly globe-straddling behemoth. To expect anything else would be parochial.

That Skyscanner has been taken over by a billion dollar corporation headquartered in Shanghai probably shouldn’t come as a surprise to anyone – it’s the very definition of indigenous success on a worldwide scale.

The figures also stack up very well for Scottish Equity Partners who will get a £500million return on an original £2.8million investment, and that will now be reinvested back into our tech community.

Ultimately, we should take the Skyscanner management at their word when they say that they remain completely committed to Scotland and will retain and expand the 450 jobs that are based here.

This uniquely Edinburgh-born success story may have reached for the skies and stayed there, but it seems that its feet will remain firmly planted on Scottish soil.

 

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SIDE

As a country, we have so much to offer in terms of boasting some of the most innovative minds on the planet – it’s what we’re increasingly good at.

We’re consistently forging new pathways and showing the rest of the world’s tech community how it’s done, and that’s something to be very proud of. Edinburgh in particular stands tall as a real hub of expertise which has helped to make it the UK’s largest financial centre after London – the Skyscanner deal discussed elsewhere in this column bears that out.

That’s why it was so great last week to hear Theresa May pledging an extra £2billion to fund cutting-edge research and development in the likes of technology and robotics, “transforming Britain into the global go-to place for scientists, investors and tech innovators,” as she put it at the CBI’s annual conference.

The cash injection is designed to help companies make the most of post-Brexit opportunities and say firmly to the world: ‘We’re very much open for business’. Fundamentally, it’s about the creation of new jobs and delivering economic growth by playing to our strengths.

However, in a savvy and ambitious move, the PM also insisted that companies must in turn do much more for the country, including paying full taxes and helping young people.

She urged bosses to work with her to “call out what is bad to promote what is good”.

Referring to corporate sinners such as Sir Philip Green and Mike Ashley, May said that when some “game the system and work to a different set of rules, the reputation of business as a whole is undermined”.

Too true – and she’s right to think that this carrot-and-stick approach will help to ensure a more ethical approach. Invest in companies first and they’re more likely to give something back.

 

LAUGH

Putting your faith in our national football side is a fool’s errand if ever there was one.

So I had to laugh when I saw that Scotland had dropped another 10 places in the FIFA rankings, putting them at 67, between Benin and Guinea-Bissau.

Apparently, we get to go back up the rankings if anyone at Hampden can successfully pinpoint either of those countries on a map.

Sure, it’s a depressing state of affairs, but then supporting Scotland has always been a roller-coaster. One minute we’re pulling off great results and looking good for Euro 2016 qualification, the next we’re failing at the very first hurdle of the Russia 2018 World Cup campaign and can’t find the back of the net.

If you didn’t laugh, you’d cry.

 

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WEEP

I like to think that I’m not the worst looking man in the world – but sometimes you have to recognise when you’re beaten hands down.

Meeting Leonardo DiCaprio at the recent Scottish Business Awards was a real pleasure, and also something of a humbling experience.

The man simply oozed charm and charisma – attributes that have seen him remain at the top of the Hollywood tree for some 20 years now.

Most importantly though, he was able to chat away to people from all walks of life and give them his undivided attention. He made many of them feel like they were in a movie themselves.

That right there is the very definition of class – and it’s enough to make the rest of us men green with envy.

 

 

 

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