Amex GBT, the world’s largest travel management company (TMC), announced that it has entered into an agreement to acquire rival CWT for $570 million, a deal believed to herald more mergers and acquisitions in the sector.
The acquisition, which is expected to close in the second half of the year and is subject to regulatory approvals and other closing conditions, is expected to add 4,000 customers to Amex GBT’s portfolio of 20,000 customers worldwide.
The deal is being touted as capitalising on the global recovery in business travel, with Amex GBT chief executive Paul Abbott expressing optimism about the prospects for business travel, claiming the market has “huge scope for growth”.
Mr Abbot noted that the recovery in corporate travel to date has been driven by small and medium-sized businesses, but “this year we will see global multinational clients with healthy growth rates in a more stable growth environment”.
However, the corporate travel market has returned at a slower pace than that of leisure and visiting friends and family (VFR) travel, with major airlines reporting that corporate travel remains significantly down compared to 2019.
The acquisition of CWT – formerly known as Carlson Wagonlit Travel – by Amex GBT, formerly owned by American Express, would mark the most significant consolidation in the corporate travel sector to date and would appear to attract the attention of competition regulators in the US and Europe.
According to Mr Abbott, consolidation is expected to continue in a “very large, fragmented and growing industry”.
“The level of investment required to meet customer expectations is significant -Best people, best technology, best software and best services consistently delivered on a global basis,” he said.
According to Amex GBTm, the deal will provide CWT customers with “more choice and value” and “greater ability to invest in software and services”.
For his part, CWT CEO Patrick Andersen noted that joining forces with Amex GBT will help accelerate the vision of a technology-enabled future for business travel.
“We are very confident in the value creation from the new combined company,” he added.
Upon completion of the transaction, Amex GBT expects to issue approximately 71.7 million shares of its common stock at a fixed price of $6.00 per share and use the cash on hand to fund the repayment of CWT’s debt and the balance of the transaction.
CWT’s shareholders, who are mainly investment funds, are subject to a 90-day lock-up for 50% of their shares and a 270-day lock-up for the remaining shares.
As a reminder, Amex GBT reported revenues of almost £2.3 billion but a loss of £136 million for 2023 in results published earlier this month.
