Sabre Holdings is poised to make what could be one of its biggest investments in recent memory, laying out what a leaked document says is up to $125 million on an undisclosed company.
Confidential papers released to investors in late-April 2012, when the company disclosed a proposed offering of $400 million of senior secured notes in the private placement market, outline a “proposed acquisition” which could take place within the next four weeks.
“It is probable that we will enter into a business combination in the second quarter of 2012,” begins a section titled Proposed Acquisition in the 351-page report.
“We anticipate this acquisition will cost between $90 million and $125 million, payable over a two-year period. On a pro forma basis, we expect that the acquisition would have resulted in an immaterial change to our consolidated balance sheet as of December 31, 2011.
“With respect to our consolidated income statement for the year ended December 31, 2011, on a pro forma basis, we expect the acquisition would have resulted in a revenue increase of under $30 million and would have been accretive to EBITDA and operating income.”
The document goes on to warn that the company “cannot assure you that this acquisition will occur on the terms described herein or at all”.
There is no indication in the document to investors (a book being run by Goldman Sachs, Morgan Stanley, Deutsche Bank, Bank of America Merrill Lynch, Barclays Capital, Natixis, and Mizuho) as to the identity of the company with which Sabre is in talks.
If the deal goes through, even at $90 million the purchase price would probably be the highest Sabre has paid for an acquisition since it bought European online travel agency Lastminute.com in 2005 for a cool $1.2 billion.
Between 2002 and 2006, when it was a public company and disclosed its finances to the US Securities and Exchange Commission, Sabre made a string of acquisitions alongside the purchase of Lastminute.com, including Zuji ($35 million), SynXis ($41 million), Dillon Communications ($30 million for remaining 49% interest) and Site59 ($44 million).
Since going private the company has bought a number of technology or service providers including SoftHotel (2011), F:WZ (2010), Flightline Data Services (2010), Caladris (2010) and EB2 (2008) – all for undisclosed sums.
Inevitably, Sabre is keeping tight-lipped over the information contained in the document.
An official says:
“We’re always evaluating opportunities for our business, however we do not comment on speculation or rumour.”
But with Sabre clearly disclosing to its investors that the company is in the throes of potentially securing a significant deal (at least financially), such a revelation is now likely to trigger all manner of raised eyebrows as to what type of company it is interested in buying.
One of the most recent deals in travel tech, reasonably close to the $90 million-$125 million figure, was the purchase by Concur of TripIt in January 2011 for $82 million cash and stock (rising to $120 million).
On the industry-facing side of its business, Sabre is already well represented in the mobile space through its TripCase system and has been busily bolstering its hospitality division with various bits of technology for a number of years.
In the B2C world of online travel agencies, Sabre has Travelocity in the US, Lastminute.com in Europe and Zuji in Asia-Pacific.
Let the other speculation (a statement in a company report is NOT speculation, it is worth pointing out) commence…
UPDATE: A month after the predicted closing period for the deal, Sabre did indeed make its acquisition, buying information service Prism.
NB: Cash pile image via Shutterstock.
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About Kevin May
Wait…is Tnooz on the block?
@pete – no, it isn’t
Well they missed buying Mobiata, which I thought a great buy by Expedia. Perhaps it’s Flight Stats? What do you think?
Yep, flightstats would be an interesting one. Sabre are already their availability supplier, but that remains kind of hidden amongst the greater focus on arrival and departure information.
My breath is bated!
Don’t forget GetThere for a cool $757M http://bit.ly/KZDVq7
@douglas – yes, from 2000! those were the days.
Kevin, the purchase price of TripIt was actually $120M. The $82M you reference was the amount of the initial payment, not the entire deal size.
@scott – hey, thx for the clarification…
So, more importantly, who is Sabre buying?
Not sure, but my guess would be something in the mobile or hotel spaces. Maybe Hotel Tonight (although seems too early for them to cash out)? Perhaps Vayant?
HRS
A OTA company in South America. Maybe Decolar. If possible.
I was going to comment the same. Latin America seems to be a hole in their B2C spectrum. With Brazil as the new 5th country by GDP, and all the region growing more than 5% a year, it seems like a big absence. Despegar, Viajanet, Hotelurbano have been consolidating interesting market positions.
It must be something regarding Brazil OTA. Datalex and Openjaw will not give Sabre more market share. Only give Sabre problems with more brains in the company. It will only give problems when they should cooperate together. “Many chefs, become a bad soup”.
A OTA company must be focused. Its impossiple to have one dev department in Belarus, one in India, one in USA, one in New Zeeland and one in Belgium. A CEO for a big OTA must work where the dev department is. Because dev is core in a OTA. The big OTAs havent understand this matter. They like to have a nice office in New York or Dallas etc. And have dev guys around the world. In my mind it isnt so well thought.
I am going to put my money on rail… all this talk of buying a ticket in one go that would cover Manchester to say Nice. I think Sabre will want to be part of that distrabution.
@michelle – rail is a strong bet, I agree.
Navitaire or HP’s hosting business – Amadeus’ IPO benefited from a 2nd leg to the business, next to the GDS
it could be a b2b provider.
The likes of OpenJaw, Datalex and SwitchFly etc are competing directly with Sabre Airline Solution (SSW) by providing API based booking engines to Airlines.
Such an acquisition could be one way to take a competitor out and to acquire a nimble technology platform.
@steve – one of those is a public company, so not sure if it is that one whether Sabre would disclose even in a confidential document that it is on the verge of making such a large investment.
Maybe they are looking at acquisitions from the BRIC markets. Despegar, Ostrovok, Hotel Urbano.
@Steve S: in fairness to Sabre, OpenJaw, Datalex and SwitchFly compete with only a very small part of Sabre Airline Solutions´ portfolio.
Dan
(I work for Amadeus but this isn´t an Amadeus view)
Question: as Sabre’s debt is already at a huge Ebitda multiple, will they manage to get the extra funds at a decent interest rate?
SilverRail?
Any new thoughts on this? GBTA is here…good place for and announcement…
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