Amadeus has announced it is to acquire Newmarket International, a leading provider of cloud-based group and event IT solutions to the hotel industry, for $500 million.

The addition of Newmarket, based in Portsmouth, New Hampshire, US will bring a strong management team and talented workforce to Amadeus that will significantly strengthen the group’s expertise and experience in the hotel IT industry, a key target sector for future growth.

Newmarket also adds established relationships with key customers in the hotel segment.

“This important and strategic acquisition will strengthen Amadeus’ position in the hotel IT sector, bringing important expertise and key customer relationships to the company that will accelerate our move into this key market,” said Luis Maroto, president, Amadeus.

“With many hotel chains at a crossroads in their IT strategy, and the provider landscape fragmented, Amadeus is committed to playing a key role in partnering with the hotel industry to address its challenges and this transaction will greatly accelerate that objective.”

Newmarket, which serves around 22,000 unique properties in 154 countries, operates in the group and event management segment of the hotel industry, which is estimated to account for 30-40 per cent of a full-service hotel’s revenues.

It will be operated as a stand-alone business within Amadeus’ Global Hotel Group which will integrate many aspects of Amadeus’ robust products and services over time. 

The combination of Amadeus and Newmarket is expected to result in revenue synergy opportunities in both Hotel IT and Distribution.

Newmarket’s products and services offerings are complementary to Amadeus’ IT product set which is focused on delivering cloud-based enterprise solutions in the area of: Central Reservations Systems, Property Management Systems, Revenue Management Systems and e-Commerce platform solutions.

“The acquisition by Amadeus is great news for both our customers and employees,” said Jeff Hiscox, president, Newmarket.

“We have built a profitable and successful business that is the undisputed leader in our market segment and by joining Amadeus we have the ideal platform to take that success to the next level and extend our leadership in hotel IT solutions”. 

As a result of the transaction approximately 430 employees globally, including Newmarket’s entire management team, will become part of the Amadeus Global Hotel Group, maintaining Newmarket’s headquarters location in Portsmouth, New Hampshire.

Newmarket has a strong track record of growth and profitability with estimated 2013 revenues of $110m and EBITDA margin of 31 per cent.

The transaction is expected to be earnings accretive to Amadeus on day one.

Amadeus and Newmarket expect to complete closing activities in the first quarter of 2014 and therefore do not expect the transaction to have any impact on Amadeus’ financial performance in 2013.