Cendant Corp.’s sale of the Travelport distribution unit for $4.3 billion to the Blackstone Group raises questions of who the Chicago-based buyer is, and what are their plans for the future.
A spokesman for Blackstone had no comment but the company is no stranger to buying tourism related business. Observers however, fully expect the sale to be short-lived.
Buyout firms such as Blackstone generally resell companies within a few years for profitable returns.
“The deal with Blackstone is likely to leave Travelport loaded with debt, as private-equity firms typically borrow to finance acquisitions,” said the Chicago Tribune.
The deal was Blackstone’s first attempt to enter the travel distribution market, but it owns numerous hotels at many price points as well as some theme parks across the world.
Blackstone has raised an estimated $50 billion for buyouts and other investments since the mid 1980s.
Travelport does about $2.5 billion in annual sales, with $1.5 billion coming from the Galileo division.
Travelport’s fast-growing Orbitz and CheapTickets.com do about $800 million in sales. Sales in the first quarter grew 27%.
For Cendant, the move was part of a dismantling plan announced last year that will include spin-offs of Realogy, the company’s real estate business. It’s Wyndham Worldwide Hospitality company is also set to be sold.
Cendant owns some of the best-known brands in hotels and car rental companies such as Avis and Budget, and Wyndham hotels.
“The deal allows us to extend our reach on a more strategic basis,” said Jeff Clarke, Travelport’s chief executive.
The deal is expected to close in August.
Report by David Wilkening
