Sabre to be purchased for $5 billion
By Dennis Schaal, Travel Weekly, 12/12/2006
Private equity firms Silver Lake Partners and Texas Pacific Group agreed to plunk down $5 billion, including taking on $550 million in debt, to acquire Sabre Holdings and take the publicly traded company private.
The deal, which is subject to regulatory and shareholder approvals, could close early in the second quarter of 2007, officials said. It is not contingent on the buyers obtaining additional financing.
The Sabre board approved the transaction and considered several other deals before signing an agreement with the two private equity firms, the company said.
"The board is not soliciting additional proposals, although the board has the ability to evaluate certain unsolicited proposals," Sabre stated on Dec. 12.
With Amadeus, Galileo and Worldspan owned by private companies, Sabre officials felt overexposed in the public arena.
Sabre stated the deal gives it "greater flexibility to invest with a long-term perspective rather than managing to short-term Wall Street expectations. Fewer public disclosures help us compete more effectively with our private competitors and give us the opportunity to have more flexibility in our customer interactions."
Sabre Holdings, which runs its GDS business through the Sabre Travel Network, also operates Travelocity and Sabre Airline Solutions. The company would still have to make some public disclosures about financials because certain long-term debt would remain outstanding.
The company stated that the $5 billion deal at $32.75 per share gives stockholders a 30% premium over the average closing price of its stock for the prior 60 trading days ending Dec. 8. However, the $32.75 per share deal represents just a 15.6% premium over the stock's closing price of $28.32 on Dec. 8.
Texas Pacific Group, with $30 billion in assets, has experience in the travel industry with prior investments in America West, Continental and Hotwire. Silver Lake Partners specializes in investments in technology companies.