Sabre held a conference call with investors and the media to give details on its $411 million acquisition of Abacus International, a global distribution system (GDS) in Asia Pacific.
The deal is subject to regulatory review in a few countries, and that review process will be "straightforward", the executives said. They're hoping for an 1 August close, but it may happen as soon as 1 July.
Abacus International itself is only about about 40% of its true staffing and resources. Each of its two dozen key markets has its own national marketing company (NMC), where, typically, the national airline is the majority shareholder. Abacus’s share in each NMC is usually less than 10%.
Sabre expects that Abacus will acquire all or a controlling interest in certain national marketing companies in the Asia-Pacific region.
Sabre executives said that some of the NMCs, because of the effectiveness of the airline partners, have good market capabilities, so Sabre doesn't want to change them.
But other NMCs could be improved by more efficiencies, and Sabre expects to work to acquire them around the time the full transaction closes. The cost would be in the singles of millions.
Sources told Tnooz anonymously that the top targets are NMCs in Hong Kong, Singapore, Malaysia, and the Philippines.
Executives told investors that some of the partner carriers may have not put emphasis on some markets where they didn't have a large presence, and that Sabre believes it can gain share in those.
Sabre CEO Tom Klein said:
"The acquisition represents the best and most capital-efficient way to expand in Asia Pacific. Abacus represents the leading GDS in the region.
The move fits with our strategy of concentrating on segments representing our core strengths....
It's a business where we know how to get scale efficiencies.... Our customers and Sabre wil benefit from the elimination of the bureaucracy and decision-making processes that result from any joint-venture.
We'll also benefit from significantly ramped up sales and account-management capabilities, the capabilities that we believe are best-in-class in the industry.
Abacus has 39% share in Asia Pacific's GDS market, including the largest portfolio of low-cost airline content.
The Asian Pacific travel and hospitality market will be come the largest regional one in the year, with a forecasted growth rate of 8 percent a year through 2018. With this transaction, we'll own the leading GDS along with all the remaining distribution rights."
Sabre will now have leading global GDS position in China and Taiwan."
Sabre said it expects a cost savings of about $10 million a year through scale efficiencies. Total head count at Abacus is 600 employees currently. No word on any cuts.
The Sabre executives said they didn't expect many cuts via data center consolidation.
The company's CFO Rick Simonson added:
"While we love the autonomy of country-level focus, we think we have a better go-to-market better in a more centralized model under a wholly-owned entity....
The deal also speeds up the cycle of getting product to market....
The long-term agreements with the airlines lock in the advantages that Sabre felt contributed value to the partnership."
TNOOZ IN-DEPTH ANALYSIS:Sabre confirms $411 million Abacus takeover