US equity firms will take the travel tech company private – but the deal may mean a round of cost cutting for Travelport.
Travelport will be snapped up by affiliates of Siris Capital Group and Evergreen Coast Capital in an all-cash transaction valued at around US$4.4 billion, a deal that is expected to close in the second quarter of next year.
As anticipated, Evergreen, the private equity affiliate of Elliott Management Corporation, and Siris will buy all of the outstanding shares in Travelport.
The third-largest e-commerce platform for the distribution of air, hotel, and other travel content will become a privately held company and its common shares will no longer be listed on any public market. However, its headquarters will remain in Langley, UK.
The travel tech company says in a statement that it will be able to actively solicit alternative acquisition proposals from third parties during a ‘go shop’ period from now until January 23.
It will also have the right to terminate the agreement with Siris and Evergreen to enter into a superior proposal if one arises.
“Travelport welcomes this proposed transaction with Siris and Evergreen, who are specialist technology platform investors. Throughout the process, Siris and Evergreen have demonstrated their deep technology expertise,” commented Gordon Wilson, president and CEO of Travelport.
“We will continue to develop and invest in our platform to serve the changing needs of our customers in the travel industry. It is very much business as usual at Travelport and we look forward to this new era in the company’s development.”
Travelport had revenues of $2.45 billion in 2017, and earnings before interest, tax, depreciation and amortisation of $467 million. It also has around $2 billion in debt, the travel news site Skift reports.
What is likely to happen after the purchase is a round of cost cutting and “steps to restructure and optimise the efficiency of its cost base”, according to Elliott Management.
Elliott is run by Paul Singer, an activist investor who is known for being a thorn in the side of the management teams of the companies he has stakes in.
At Travelport, a next move may include potentially spinning off the majority stake it has in eNett, the company’s payments unit, which it bought several years ago, Skift speculates.