Webjet Group (ASX:WJL) Falls 25% on Failed Takeover and Downgraded Guidance- Value Trap or Hidden Opportunity?

Webjet Group Plunges After Takeover Collapse

Webjet Group (ASX: WJL) plunged 25 per cent to A$0.58 on Friday, marking its largest single-day drop since listing on the ASX. Both potential acquirers, Helloworld Travel (ASX: HLO) at 90 cents per share and private equity firm BGH Capital at 91 cents, walked away without making binding offers after roughly 12 weeks of due diligence. To make matters worse, management simultaneously revealed a downgrade to FY26 earnings guidance. With the stock now at its lowest level since April 2025, investors are left with a straightforward question: Is this an overreaction, or are the departing suitors telling us something important?

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Why Both Suitors Walked Away, And What It Signals

Helloworld, which holds 17.3 per cent of Webjet, tabled its 90-cent all-cash offer in November 2025. BGH Capital countered two days later at 91 cents. Both were granted full due diligence access, and the board engaged constructively with each for around 12 weeks. Neither put forward a binding proposal.

In our view, this is the most telling part of the story. When two separate parties, one a strategic buyer and one a private equity firm, both walk away after seeing the books, it raises legitimate questions about what they found. The Webjet board maintains that neither offer provided “sufficient certainty,” suggesting the gap between what suitors would pay and what the board wanted may have widened during due diligence. That said, the board remains “open to future proposals”, and with Helloworld still holding 17.3 per cent, this story may not be finished.

The EBITDA Downgrade Nobody’s Talking About

Lost in the takeover headlines is what we believe is the bigger story: Webjet Group cut its FY26 underlying EBITDA guidance to A$28–29 million, excluding Webjet Business Travel. That is a steep fall from A$39.4 million in FY25 and a further trim from the A$30-32 million guided just three months earlier.

This likely explains why both suitors pulled back. The online travel space is fiercely competitive, with Webjet Group battling Booking.com, Expedia, and Google Flights. Domestic bookings have been pressured by cost-of-living headwinds and reduced airline capacity following REX’s administration. Meanwhile, the recently acquired Webjet Business Travel segment is expected to further reduce EBITDA by A$600,000 to A$900,000 in the second half.

On the positive side, management has resumed its A$25 million on-market share buyback, signalling it views the stock as undervalued. That said, whether a shrinking earnings base justifies a buyback is a fair question.

The Investor’s Takeaway for Webjet Group

The bull case rests on the balance sheet. Webjet Group held A$111.9 million in net cash as of September 2025, a meaningful chunk of the current A$228 million market capitalisation. Strip out the cash, and you’re paying roughly 4x EV/EBITDA for an established consumer travel brand, which looks optically cheap. Helloworld could also return with a revised offer down the track.

The bear case, however, is hard to dismiss. Two informed buyers walked away after full access to the books. Earnings are shrinking, not growing, and competition is intensifying with no obvious near-term catalyst.

We believe the cash pile provides a genuine floor, but the business needs to prove it can stabilise earnings before this becomes a compelling buy. Investors should watch for Helloworld’s next move, the Q3 trading update, and any early signs of progress on management’s FY30 strategic plan. Until then, patience may be the smarter play.