and Preview Travel to Merge

Sabre Holdings Corporation (NYSE:TSG) and Preview Travel, Inc. (Nasdaq:PTVL) today announced the creation of a new company that combines Sabre’s division with Preview Travel. The transaction creates the clear leader in online travel, a new company that will be known as Sabre will retain 70 percent ownership of the new company with the remaining 30 percent owned by Preview Travel stockholders. The new company will benefit from a new, five-year contract with America Online, Inc. that makes the exclusive reservations engine for all travel-related services within the AOL service, AOL.COM, CompuServe, Digital City and Netscape, and provides with a share of specified travel-related advertising revenues. In addition, Yahoo! Inc. has extended its existing contract with and has agreed to invest in the new entity.

The merger creates a new powerhouse in the online travel market, the largest retail e-commerce category, projected to grow from $7.8 billion in 1999 to $32.1 billion by 2004.(2) The new, combined company will have more than 17 million registered memberships and more than eight million unique monthly visitors—making it 50 percent larger than the next largest online travel agency site.(3) will have established distribution relationships with America Online/Netscape, Yahoo!, Lycos, Go Network, Excite, @Home and CompuServe, among other leading Internet sites. Combined travel sales for the two companies in the first half of 1999 totaled more than $467 million. The new company is projected to be the third largest e-commerce site after and eBay4, and one of the top ten travel agencies based on 1999 booking estimates.(5)
At the close of the transaction, the combined business will be headquartered in Fort Worth, Texas, with a significant operating presence in San Francisco. Terrell B. Jones, president of, will be the president and chief executive officer of the new company. Donald J. Carty, chairman of Sabre Inc., will serve as chairman of the board until a new Sabre chief executive officer is named. James Hornthal, founder and chairman of Preview Travel, Inc., will serve as vice chairman.
“The new will bring together the very best of Travelocity and Preview Travel—two successful and talented organizations—to create an unparalleled combination of content and innovative services to online consumers,” Terrell B. Jones said. “We’ve long admired the Preview Travel site for the experience it provides consumers. Going forward, as the leader in online travel, our focus will continue to be on providing the best shopping opportunities and customer support available anywhere—online or offline.”

“Bringing together the innovative technology solutions of Sabre’s with Preview Travel’s effective integration of content, community, commerce and world-class customer service will benefit our customers and our partners,” James Hornthal said. “We expect the additional scale that we will achieve throughout the enterprise to translate into long-term consumer and stockholder value.”

At close of the merger transaction between Travelocity and Preview Travel, will have a new five-year agreement with America Online. Under the new deal, the new will be the exclusive reservations engine for all travel-related services within the AOL service, AOL.COM, CompuServe, Digital City and Netscape. The AOL agreement will allow users to access the same set of travel reservations services from each of these AOL brands, providing a consistent and seamless experience from multiple access points. The agreement also calls for a unique revenue sharing structure designed to reward both companies based on the success of their trend-setting partnership. AOL will share in commissions on travel sales and will share in advertising revenue.

Sabre also announced that it has agreed on terms with Yahoo! Inc. for an extension of the existing contract, strengthening the relationship between and Yahoo! Travel, Yahoo!‘s comprehensive resource for researching, planning and booking travel. The agreement will be contributed to the new as part of the merger. Yahoo! has also agreed to make a minority investment in the new company, demonstrating additional support of the ongoing relationship with


Sabre will contribute the assets of plus $50 million in cash in exchange for 70 percent ownership in the new company, formed as a Delaware limited partnership. Current Preview Travel stockholders will hold 30 percent of the combined entity through a new corporate entity, Inc. At the close of this transaction, Preview Travel shares will convert 1:1 into shares of the new company, and Inc. will trade under the symbol TVLY on the Nasdaq National Market System.

The merger has been approved by both Sabre and Preview Travel boards of directors, and is expected to close in first quarter 2000. The transaction is subject to regulatory approval, customary closing conditions and requires approval by Preview Travel’s stockholders.

Preview Travel was advised by Hambrecht and Quist on the transaction, while Sabre was advised by Goldman Sachs & Co.
“We have been committed to unlocking the value of for Sabre’s shareholders,” said Donald Carty, chairman of Sabre Inc. “Through the new ownership structure, we’ve created a pure Internet play in which our shareholders will own a majority stake of the third largest e-commerce site. In addition, this transaction provides with access to Internet currency, and at the same time preserves the product development synergies that exist between and Sabre.”

Once the two sites are fully integrated, the new will use the Sabre computer reservations system, strengthening Sabre as the largest processor of travel transactions on the Internet and the leader in all other channels of travel distribution. Sabre will consolidate the financial results of the new company into its own financial reporting and will continue to trade under the symbol TSG on the New York Stock Exchange. AMR’s majority-ownership of Sabre is unaffected by this transaction.

“Consolidation in growing markets is inevitable. The drive to achieve global scale is incredibly compelling for us and our strategic marketing partners,” said Chris Clouser, president and chief executive officer of Preview Travel, Inc. “By combining resources with Travelocity, we are able to help write the next chapter in online travel. We expect our clear leadership position will pay important dividends, now and in the future, for our customers, employees and shareholders.”