Thursday, March 28, 2024
American Express Global Business Travel (GBT) announced on Monday its intention to acquire CWT, a prominent provider of global business travel and meetings solutions. This move, which could potentially indicate a trend towards increased mergers and acquisitions in the industry, has drawn the interest of investors.
The deal, valued at approximately $570 million and subject to adjustments in purchase price and other conditions, is expected to be completed in the second half of the year, pending regulatory approval and the fulfillment of certain closing conditions.
“This transaction is a unique opportunity to significantly grow our business,” Amex GBT CEO Paul Abbott said in a call with investors early Monday. “We will welcome 4,000 new customers to the proven Amex GBT software and services model, create more choice for customers and more opportunities for our people.”
Abbott also talked about the acquisition being in line with the objectives of its mergers & acquisitions strategy in terms of growth opportunity and synergies to cost and productivity. He said the deal would increase total transaction value by 45% and revenue by 34%. In addition, synergies worth up to $155 million have been identified already.
Amex GBT has a track record of significant acquisitions, such as acquiring competitor HRG in 2018 for approximately £400 million and Egencia from Expedia Group in 2021 for an undisclosed amount. This deal made Expedia Group a shareholder in Amex GBT, establishing a long-term strategic alliance.
The CWT acquisition will be financed through a combination of stock and cash. CWT is expected to generate around $850 million in revenue and achieve an adjusted EBITDA of $70 million to $80 million in 2024.
After the acquisition, CWT’s clients will have access to Amex GBT’s exclusive software and services, aimed at improving travel and expense management.
“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,” CWT CEO Patrick Andersen said in a statement. “We are highly confident in the value creation of the combined company.”
Morgann Lesné, a specialist in travel technology mergers and acquisitions at Cambon Partners, praised the decision.
“Business travel is more than any other market a volume play: for the customers, for the suppliers. Size is the only way to make economies of scale and get to relevant levels of profitability,” Lesné said. “The acquisition of CWT by Amex GBT will put increasing pressure on the likes of Travelperk and Navan, both of which will have to fight even harder to get to that level of scale that a giant like Amex GBT-CWT is about to become.”
Lesné went on to say the deal is further proof that the year could turn out to be the biggest ever for M&A activity in the travel technology space.
“A wave of inevitable consolidation following COVID needs to take place whilst at the same time high interest rates have stalled start-up fundraising, leading to people having to merge or face closing,” he said. “Meanwhile record tourism figures for 2023 and a very positive outlook for 2024 are leaving many players feeling confident that now is the right time to acquire competitors.”
Abbott, during an investor briefing, highlighted the contributions CWT brings to AmexGBT. “CWT’s vision of leveraging technology to advance business travel aligns with our emphasis on software and service solutions,” he commented, lauding CWT’s digital innovations and the significant opportunities for employing generative artificial intelligence across its offerings.
“CWT’s vision of a tech-enabled future for business travel is aligned with our software and services model,” Abbott said, praising CWT’s digital products and its “immense potential” in using generative artificial intelligence across its products and services.
“Through the integration of CWT, we will grow our footprint in high-value industry verticals, expand our professional services business and bring more customers onto our software solutions to further differentiate our business and add significant value.”
Amex GBT has recently introduced a program focused on artificial intelligence (AI) initiatives, with the goal of promoting innovation and efficiency in the corporate travel management sector.
Headquartered in New York City, this global firm specializing in corporate travel management went public in December 2021, with an expected market valuation of $5.3 billion.
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