Online Travel Mergers and Acquisitions Soar

The online travel consolidation train is running full speed ahead.
There were at least 20 major online travel transactions within the past 12 months for a combined purchase price of more than $1.8 billion (see table below). The most active buyers were the Global Distribution Systems (GDS) buying online agencies and B2B technology companies, and leading online travel agencies buying smaller competitors.
The effects of these deals are clear—the top five online travel services represent 57% of the entire online travel market, according to PhoCusWright data. The rate of consolidation should increase in 2001 as small companies find it difficult to compete in this expensive marketplace, financing opportunities dwindle and market leaders get even more entrenched. The largest of all deals was Sabre’s October acquisition of GetThere.com
for $757 million. That transaction solidly positioned Sabre as the leading provider of business-to-business online travel services. Before being acquired, GetThere.com was involved in its own M&A activity. It purchased AllMeetings Corp., a provider of online corporate travel and meeting management solutions, in July for $25 million. The month prior, GetThere.com bought Automated Travel Systems, an Internet low fare search system.
GetThere.com was not Sabre’s only online travel deal. In August, Sabre acquired Gradient Solutions, a Dublin, Ireland-based travel technology company that complements GetThere.com. Gradient’s competitor, Datalex, had purchased Sight and Sound for $40 million to shore up its booking engine technology. To strengthen its position in the Web-based corporate travel market, Datalex also acquired 50% of Yatra, which provides a direct-connect solution for corporate travel, for $11 million. Then, to further compete with the Sabre/Gradient combination, Datalex teamed up with another leading GDS, Worldspan, which took a small equity position in Datalex for $10 million in September.
At least two other deals were valued at over $250 million; both were acquisitions of online travel agencies. Travelocity.com spent $286.2 million to “merge” with Preview Travel, the third largest online travel agency, to form the market leader. The price included Preview Travel stock as well as the value of the vested options of Preview Travel assumed by Travelocity.com and other costs directly related to the merger. That payment seems reasonable considering that just one month prior, Galileo spent close to the same amount—$269 million—to acquire 80% of the seventh largest online travel agency—Trip.com. (Galileo had purchased 20% in Trip.com in April 1999.)
Other online travel agencies acquired during the year were Travelscape.com by Expedia for $103 million, OneTravel.com by Amadeus and Terra Lycos (55% stake), and TravelNow.com by Hotel Reservation’s Network for $47.4 million. In January 2001, Travelbyus.com merged with Aviation Group Inc. to form two separate public companies, Travelbyus Inc. and Travelbyus.com Ltd. Two European online agencies changed hands: the French Degriftour Group was bought by LastMinute.com for $88.4 million and the Swedish Travelstart.net was purchased by Tiss.com.
Consolidation in the adventure travel industry became reality: there were three major transactions in the year, including Unexplored’s acquisition of Adventureseek in November. That leaves Away.com, Gorp, and iExplore as leading independent adventure travel sites (National Geographic took a 30% stake in iExplore in August).
All four leading GDS made at least one online travel deal in the year; besides those mentioned, Amadeus also acquired Vacation.com in a $90 million deal.
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