American Express Global Business Travel is to acquire major rival CWT in a deal worth $570 million after the boards of both companies approved the transaction.
Amex GBT said that the deal would provide CWT’s customers with “more choice and value”, as well as leading to “greater capacity for investment in software and services”.
Paul Abbott, Amex GBT’s CEO, said: “Bringing CWT onto the proven Amex GBT software and services model will create more choice for customers, more opportunities for people and more value for shareholders.”
The deal will see two of the world’s largest travel management companies come together. CWT currently has 4,000 customers with expected total transaction value (TTV) of around $14 billion and revenue of $850 million in 2024. Meanwhile Amex GBT is forecast to achieve TTV of around $31 billion this year and revenue of $2.5 billion.
Amex GBT’s acquisition of CWT will be funded by a combination of shares and cash. It is expected to close in the second half of 2024 subject to receiving the necessary regulatory and other approvals.
CWT’s CEO Patrick Andersen added: “Joining forces with Amex GBT helps accelerate our vision of a tech-enabled future for business travel, where people and technology combine to deliver an exceptional customer experience. We are highly confident in the value creation of the combined company.”
The companies said in a statement that once the deal is completed CWT customers would gain access to Amex GBT’s platforms such as Neo1, Neo and Egencia.
The deal continues the trend of consolidation within the global TMC sector. Amex GBT has already been a major a player in this process following its previous acquisitions of HRG in 2018 and then Egencia from Expedia Group in 2021.
Amex GBT is already ranked as the number one TMC in Europe with estimated gross European sales of €10.8 billion in 2022. While CWT ranked in third place with European sales of €3.8 billion during the same year.
CWT’s current shareholders are “primarily” investment funds after the Minneapolis-based business went through a pre-packaged Chapter 11 bankruptcy protection process in 2021.
To fund its latest acquisition, Amex GBT said it would issue around 71.7 million new shares at a fixed price of $6 per share. It would also “use cash on hand to fund the retirement of CWT debt and the remaining transaction consideration”.
CWT shareholders will own around 13 per cent of Amex GBT, which has been listed on the New York Stock Exchange since May 2022, when the deal is completed.
Amex GBT added that it had identified around $155 million of annual “synergies” or cost cuts within the next three years following the CWT acquisition.
Abbott called the CWT deal a “unique opportunity to significantly grow our business” during a conference call on Monday (25 March).
It is currently unclear whether the CWT brand will be retained following completion of the acquisition.
Martin Ferguson, Amex GBT’s VP of public affairs, told BTN Europe: “For now, nothing changes. It’s business as usual. Plans for the future will be developed during the integration process.”