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After much posturing, Travelocity (Nasdaq: TVLY) agreed to be puchased by Sabre Holdings (NYSE: TSG) after all. Sabre on Monday upped its buyout offer to US$28 per share, increasing the value of the deal to about $420 million. The company's original offer, made last month, was for $23 per share, or about $345 million.
A special committee formed to consider the offer rejected the first proposal as too low but accepted the revised bid.
Sabre also said it will settle all shareholder lawsuits filed in an effort to squelch the deal.
Bizarre Soap Opera
According to Morningstar.com, the deal will bring to an end "a bizarre soap opera that has played out over the past month." The firm noted that the deal will almost certainly go through.
"We're still not sure exactly what backroom machinations went on here, but we're glad to see the whole mess finally resolved," Morningstar.com said in a research note.
Indeed, the soap opera has been going on for more than a month. Sabre launched Travelocity in 1996 and owned it outright until March 2000, when it spun off the company, retaining a 70 percent stake and voting rights.
After watching other travel sites get snapped up by competitors -- for example, USA Networks purchased a controlling stake in Expedia and Cendant bought out Cheap Tickets -- Sabre decided to solidify its position in the online travel game.
The Financial Side
Travelocity closed the regular session Monday up 3.98 percent at $27.97, and edged up to $27.98 in early trading Tuesday. Sabre shares continued a slow decline, hitting $45.33 in early trading Tuesday after falling to $45.35 on Monday.
Travelocity also issued new financial guidance for the
first quarter. In a filing with the U.S. Securities and
Exchange Commission, the company said it expects
earnings of 10 to 12 cents per diluted share, up from
its previous estimate of 8 to 10 cents per share.
