Travelocity Accepts Sweetened Sabre Deal

After much posturing, Travelocity(Nasdaq: TVLY) agreed to be puchased by Sabre Holdings (NYSE: TSG) after all. Sabre on Monday upped its buyout offerto 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 offerrejected the first proposal as too low but acceptedthe revised bid.

Sabre also said it will settle allshareholder lawsuits filed in an effort to squelch the deal.

Bizarre Soap Opera

According to, the deal will bring to an end “abizarre soap opera that has played out over the pastmonth.” The firm noted that the deal will almost certainly gothrough.

“We’re still not sure exactly what backroommachinations went on here, but we’re glad to see thewhole mess finally resolved,” said ina research note.

Indeed, the soap opera has been going on for more thana month. Sabre launched Travelocity in 1996 and ownedit outright until March 2000, when it spun off thecompany, retaining a 70 percent stake and voting rights.

After watching other travel sites get snapped up bycompetitors — for example, USA Networks purchased acontrolling 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 3.98percent at $27.97, and edged up to $27.98 in earlytrading Tuesday. Sabre shares continued a slowdecline, hitting $45.33 in early trading Tuesday afterfalling to $45.35 on Monday.

Travelocity also issued new financial guidance for thefirst quarter. In a filing with the U.S. Securities andExchange Commission, the company said it expectsearnings of 10 to 12 cents per diluted share, up fromits previous estimate of 8 to 10 cents per share.

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