A deal that was perhaps unlikely just 12 months ago: American Express Global Business Travel is to buy Expedia Group's corporate travel division Egencia.
Expedia Group would take a 14% ownership in GBT, with an approximate value of US$750 million.
In addition, CFO Eric Hart said Expedia's 10-year lodging-supply agreement with GBT would generate in excess of US$60 million in earnings before interest, taxes, depreciation and amortisation, based on 2019 volumes.
The proposed deal is subject to consultation by Expedia Group and Egencia with employee representatives, as well as customary closing conditions, including regulatory approvals.
Hart said he expected the deal to close, pending regulatory approval, in 9 to 12 months.
Amex GBT says it will "continue to invest in the Egencia brand, its people and technology, as part of the world’s leading business travel platform".
Amex GBT CEO Paul Abbott said, "Our strategy is to provide customers with unparalleled choice by having the best solutions for each managed travel segment that we serve. In Egencia, we would welcome the industry’s leading digital business travel platform.
“Egencia would be strengthened by GBT’s complementary technology, enterprise capabilities and cutting-edge content. This would create new opportunities for both multinational and small and medium-sized enterprise clients, suppliers and the talented teams within both organisations."
Expedia CEO Peter Kern called the deal "extremely exciting to us," also pointing out three goals from this union.
First, Expedia is attempting to find the best opportunities for all of its businesses. Egencia in GBT's hands represents a new corporate enterprise to focus on that particular customer.
Second, he pointed to the long-term lodging supply and technology agreement Expedia plans to enter with GBT, which is in alignment with Expedia's efforts to grow its B2B efforts in the travel industry, important to its long-term strategy.
Finally, Kern said Expedia has been on a mission to simplify its company, and GBT's acquisition of Egencia will help it focus more on its core B2B and B2C businesses.
The deal comes amid ongoing interest in financial backing the new breed of corporate travel management startups, such as TripActions and TravelPerk.
The pair recently announced US$155 million and US$166 million investment rounds, respectively.
Egencia was considered a small player among major travel management companies such as Amex GBT, BCD Travel and CWT.
It was created as a unit within Expedia in 2004, before renaming to Egencia in 2008 following the acquisition of a venture capital-backed business travel startup in France of the same name.
Acquisitions of its own came in 2011 and 2012 with deals to buy Traveldoo and VIA Travel, respectively.
Ariane Gorin, president of Expedia Business Services, said, "We are thrilled by the potential transaction and what GBT and Egencia could achieve together, as Expedia Group seeks to simplify our business and be a leader in all of our endeavours. The combination of GBT’s leading solutions with Egencia’s great technology and team would help create the world’s best business travel offerings for customers and suppliers.
“At the same time, a greatly expanded, long-term accommodations supply agreement with Expedia Partner Solutions (EPS) would enhance GBT’s Supply MarketPlace and meaningfully further Expedia Group’s goal of powering businesses across the entire eco-system."
Source: PhocusWire and Travel Weekly