As the Asian traveler receives more attention from the global travel industry, major travel technology provider Sabre Corporation announced today that it has entered into an agreement to acquire Abacus International, the leading global distribution system (GDS) in the Asia-Pacific Region.
Sabre currently holds a 35 percent stake in Abacus. It will purchase the remaining portion from a consortium of 11 Asian airlines for a net cash consideration of $411 million.
"The Asia-Pacific travel market is the largest and fastest growing in the world," said Tom Klein, Sabre president and CEO, via a release. "Acquiring Abacus immediately combines the global capabilities of Sabre with the deep local market expertise of the leading Asia-Pacific GDS. This powerful combination will give customers even more innovation and service options, while allowing Sabre to accelerate growth globally in a very capital efficient way - and to gain regional synergies in all three of our businesses serving travel agents, airlines and hospitality companies."
Abacus International President and CEO Robert Bailey added: "With our extended network in Asia Pacific, Abacus has built a trusted brand of unique significance and scale. We now have the opportunity to take the business forward even faster, broadening the scope within the Sabre family and with the support of our shareholder carriers. This is great news for the industry in Asia Pacific, and we look forward to passing the benefits of integration to all sectors of this region's diverse travel community."
Abacus currently serves more than 100,000 travel agents across the Asia-Pacific, boasting global and local relationships with airlines and hotels in the region's 59 markets. That includes the leading portfolio of low-cost content and Chinese airline content.
The acquisition includes new long-term distribution agreements between Sabre and the 11 airline owners of Abacus.
"We look forward to continuing our long-term business relationships with our former partners in Abacus, and our new agreements will provide benefits and confidence to travel agents throughout the Asia-Pacific region for many years to come," said Greg Webb, president of Sabre Travel Network.
"Abacus currently provides a broad set of services to its customers using a base of Sabre technology for the large majority of core functions to market, distribute, sell and service travel in the Asia-Pacific region," Webb added. "That, along with deep local market capabilities, will result in a smooth transition for Asia-Pacific customers, who should see the benefits of global capabilities while continuing to use our familiar, leading technology."
Abacus, which will operate as a region of Sabre Travel Network, is expected to be an added benefit to Sabre Airline Solutions and Sabre Hospitality Solutions, which already provide support to 78 airlines and thousands of hotels across the Asia-Pacific region. Sabre will continue providing technology services to INFINI, a local Japanese GDS.
"Sabre and Abacus have established the gold standard for service and content in the Asia-Pacific region, and that only gets better," Klein said. "Together with Abacus, Sabre will provide customers and suppliers with improved and faster access to Sabre's industry-leading innovations, including low-cost carrier content, ancillary capabilities, data analytics, and the latest in mobile solutions and personalization services. Additionally, airlines and travel agencies will have more options for new and differentiated products and services created specifically for customers in the Asia Pacific market."
Subject to regulatory approvals and other closing conditions, the transaction is expected to close in the third quarter of 2015. It will likely be financed via $250 million in cash on hand, augmented by incremental net debt of roughly $160 million.
Assuming Sabre officially closes the transaction in the third quarter, the major company expects the transaction will increase 2015 revenue by approximately $120 million, be "approximately neutral" to 2015 Adjusted EPS (earnings per share) and "modestly accretive" to current-year Adjusted EBITDA.
Looking ahead to 2016, Sabre expects the transaction to increase revenue by more than $300 million, to increase Adjusted EBITDA by approximately $50 million and to be accretive to Adjusted EPS by approximately $0.05.
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