The Flight Centre Travel Group Ltd (ASX: FLT) share price is on course to start the week with a decline.
In afternoon trade, the travel agent giantâs shares are down 2% to $18.45.
Why is the Flight Centre share price falling?
There could be a few reasons for the weakness in the Flight Centre share price on Monday.
This includes high levels of short interest, weakness in the travel sector, and the completion of its share purchase plan (SPP).
In respect to the latter, this morning Flight Centre revealed that it received strong demand for its SPP from eligible retail shareholders. So much so, the company elected to increase the size of the plan from $40 million to $60 million.
Why is Flight Centre raising funds?
The proceeds from the SPP will be used to support the acquisition of United Kingdom-based luxury travel specialist Scott Dunn.
These funds were raised at an issue price of $14.60, which was in line with what institutional investors paid at the end of January.
Itâs possible that some retail investors are selling their SPP shares today for a quick profit. Especially given that the Flight Centre share price was trading at a 29% premium to the issue price.
Flight Centreâs managing director, Graham Turner, was pleased with the news. He said:
We are delighted with the very strong demand and we thank eligible shareholders for their support. By increasing the SPP offer to $60million, we have provided our shareholders with the opportunity to secure a more meaningful stake in their company with a view to benefitting to a larger degree as its post-COVID recovery gains momentum.
We see the Scott Dunn acquisition as an exciting opportunity and a strong addition to our diverse, global brand network. The acquisition will significantly strengthen our northern hemisphere leisure footprint and fast-track our plan to develop a global luxury collection of travel brands operating in a highly resilient sector of the industry.
The post Why is the Flight Centre share price lagging the ASX 200 on Monday? appeared first on The Motley Fool Australia.
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More reading
- Here are the 10 most shorted ASX shares this week
- When will Flight Centre shares resume paying dividends?
- Should I buy Flight Centre shares at $19?
- Here are the 10 most shorted ASX shares this week
- These ASX 200 shares smashed the market in February
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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