Sabre Holdings is poised to make what could be one of its biggest investments in recent memory, laying out what a leaked document says is up to $125 million on an undisclosed company.
Confidential papers released to investors in late-April 2012, when the company disclosed a proposed offering of $400 million of senior secured notes in the private placement market, outline a "proposed acquisition" which could take place within the next four weeks.
"It is probable that we will enter into a business combination in the second quarter of 2012," begins a section titled Proposed Acquisition in the 351-page report.
"We anticipate this acquisition will cost between $90 million and $125 million, payable over a two-year period. On a pro forma basis, we expect that the acquisition would have resulted in an immaterial change to our consolidated balance sheet as of December 31, 2011.
"With respect to our consolidated income statement for the year ended December 31, 2011, on a pro forma basis, we expect the acquisition would have resulted in a revenue increase of under $30 million and would have been accretive to EBITDA and operating income."
The document goes on to warn that the company "cannot assure you that this acquisition will occur on the terms described herein or at all".
There is no indication in the document to investors (a book being run by Goldman Sachs, Morgan Stanley, Deutsche Bank, Bank of America Merrill Lynch, Barclays Capital, Natixis, and Mizuho) as to the identity of the company with which Sabre is in talks.
If the deal goes through, even at $90 million the purchase price would probably be the highest Sabre has paid for an acquisition since it bought European online travel agency Lastminute.com in 2005 for a cool $1.2 billion.
Between 2002 and 2006, when it was a public company and disclosed its finances to the US Securities and Exchange Commission, Sabre made a string of acquisitions alongside the purchase of Lastminute.com, including Zuji ($35 million), SynXis ($41 million), Dillon Communications ($30 million for remaining 49% interest) and Site59 ($44 million).
Since going private the company has bought a number of technology or service providers including SoftHotel (2011), F:WZ (2010), Flightline Data Services (2010), Caladris (2010) and EB2 (2008) - all for undisclosed sums.
Inevitably, Sabre is keeping tight-lipped over the information contained in the document.
An official says:
"We’re always evaluating opportunities for our business, however we do not comment on speculation or rumour."
But with Sabre clearly disclosing to its investors that the company is in the throes of potentially securing a significant deal (at least financially), such a revelation is now likely to trigger all manner of raised eyebrows as to what type of company it is interested in buying.
One of the most recent deals in travel tech, reasonably close to the $90 million-$125 million figure, was the purchase by Concur of TripIt in January 2011 for $82 million cash and stock (rising to $120 million).
On the industry-facing side of its business, Sabre is already well represented in the mobile space through its TripCase system and has been busily bolstering its hospitality division with various bits of technology for a number of years.
In the B2C world of online travel agencies, Sabre has Travelocity in the US, Lastminute.com in Europe and Zuji in Asia-Pacific.
Let the other speculation (a statement in a company report is NOT speculation, it is worth pointing out) commence...
UPDATE: A month after the predicted closing period for the deal, Sabre did indeed make its acquisition, buying information service Prism.
NB:Cash pile image via Shutterstock.