Worldspan owners have lost out on their bid, as Amadeus confirmed it has agreed to a leveraged buy-out by BC Partners and Cinven, managers of two of Europe’s largest buyout funds.
The main airline shareholders in Amadeus – Air France, Lufthansa and Iberia – have selected the two financial institutions as preferred bidders for the company at a price of euros 7.35 per share. The takeover would rank as one of Europe’s biggest acquisitions by a buyout firm.
Subject to final terms to be agreed, all shareholders will be offered €7.35 per class A share, with the airlines retaining some of their stakes. The aim is to de-list the Madrid-based GDS from the stock market, with the three airlines still retaining an interest in the business.
The airline owners are betting that the buyout firms will be more effective in raising earnings, as they continue to cut costs and selling assets to reduce debt after the adverse effects of SARS, 9-11, Iraq war, and rising oil prices.
Fierce competition between as many as 12 private equity firms finally came down to the offer that best matched the airlines’ aspirations to maintain managerial influence, reported the Financial Times.
Cinven and BC Partners will probably “expand Amadeus with acquisitions and then cut costs and sell out,” said Chris Davison, a buyout industry analyst at Almeida Capital.
Amadeus sells services to 140 airlines in 210 countries. It recently expanded its internet holdings by acquiring Opodo, Europe’s equivalent to Orbitz.
Report by Charles Kao
