American Express Global Business Travel (GBT) will become a public
company through a special purpose acquisition company (SPAC) deal with Apollo
Strategic Growth Capital (APSG).
With plans to trade under the ticker GBTG, the company is expected
to have a market capitalization of $5.3 billion.
The transaction is expected to provide up to $1.2 billion of gross
proceeds, of which $335 million is fully committed from new investors including
Apollo, Sabre, Zoom Video Communications, private equity group Ares Management
Corporation and investment adviser HG Vora.
Upon the closing of the transaction, these companies will become
shareholders of GBT, joining American Express Company, Expedia Group and
Certares.
“Becoming a public company will be a historic milestone on GBT’s
growth journey. Commitments from new investors like Zoom, Sabre, Apollo, Ares
and HG Vora are a huge vote of confidence in our business and the future of
business travel, and meetings and events,” says Paul Abbott, CEO of GBT.
“We expect that becoming a listed company will give us the
additional investment capacity to strengthen our commitment to providing
unrivaled value, choice and experiences to our customers and partners.”
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According to GBT’s investor presentation, prior to the pandemic, the
company managed $39 billion in global business travel spending in 2019 - a 40%
higher total transaction value than its next closest competitor that year, BCD
Travel.
Revenue in 2019 was $2.8 billion and adjusted EBITDA was $502
million. And, thanks in part to $235 million in cost reductions the company has
implemented since early 2020, it says it can return to that adjusted EBITDA
level if its business returns to just 70% of 2019 levels.
GBT says nearly half, 48%, of its revenue comes from companies in
the United States and 26% is from Europe, the Middle East and Africa.
Three-quarters of its revenue comes from travel and 24% from product and professional
services. The company notes that “no single customer or supplier accounts for
greater than 6% of total revenues.”
Among its 19,000 customers, GBT says it has 40 companies on BTN’s Corporate
Travel 100 list, five of the 10 largest U.S. banks, five of the 10 largest
health care companies and three of the four “Big Four” accounting firms.
The company says it is “positioned for significant growth in the
high-value SME segment,” in part due to its acquisition
of Egencia from Expedia Group, which closed in early November and doubles
GBT’s roster of small- and medium-size enterprises.
GBT estimates total travel spend by SMEs was $270 billion in 2019 but
only 30% of that was “managed” – creating a significant growth opportunity.
Both GBT and APSG boards of directors have approved the proposed
transaction, which is expected to be completed in the first half of 2022.
Upon the closing of the transaction, the combined company will be
renamed Global Business Travel Group, Inc. and will continue to conduct its
day-to-day business under its existing name and brand American Express Global
Business Travel.
In a separate announcement today, Sabre and GBT say they will work
together to develop technology over the next 10 years focused on solutions that
“will enable the future of corporate travel distribution.” As part of the partnership,
GBT will make a “multi-million dollar, long term annual investment” in the effort.
“As industry thought
leaders, GBT and Sabre will define the future by developing distribution
software and capabilities that provide our customers and supplier partners with
the value, choice and experiences they expect,” Abbott says.
“Combining Sabre’s
retailing and content aggregation capabilities and GBT’s corporate customer
software and world class customer service, will enable us to deliver the
business travel experiences corporate travelers want.”