Elliott Management, Paul Singer’s activist hedge fund, is teaming up with Siris Capital to buy Travelport, a UK-headquartered provider of technology services to travel companies, in a $4.4bn deal that highlights Elliott’s recent push to turn its activism into takeover deals.
The deal comes about nine months since news broke that Elliott had built an activist stake in US-listed Travelport and that it was pushing for the company to explore a sale of itself.
Bloomberg reported in March that Elliott owned 11 per cent of Travelport’s shares, sending the company’s stock price up to $16.70.
But the deal unveiled on Monday will see Elliott and New-York based Siris Capital pay just $15.75 a share for Travelport, a meagre 2.3 per cent premium to Friday’s close and a 22 per cent discount to the high of $20.30 reached in July of this year.
The transaction is the latest example of Elliott taking an activist stake in a company and then turning itself into the ultimate acquirer of the business. Earlier this year Elliott teamed up with another private equity firm, Veritas Capital, to buy Athenahealth, a US healthcare technology group, for $5.7bn after months of trying to push out the company’s chief executive and founder.
The strategy is being led by Jesse Cohn, the 37-year-old considered one of Mr Singer’s most senior lieutenants.
Travelport, based in Langley, near London, provides business-to-business distribution and payment technology that connects airlines, hotels and similar companies with travel agents and booking websites. It also offers ticketing to airlines, as well as shopping services, which are becoming an important part of carriers’ revenues.
The company had revenues of $2.45bn in 2017 and earnings before interest, tax, depreciation and amortisation of $467m, but has reaffirmed its guidance that its adjusted ebitda may shrink or grow only slightly this year.
Following the company’s third-quarter results in November, when it announced a 40 per cent fall in pre-tax profit, chief executive Gordon Wilson said that “business momentum is being tempered by some specific customer headwinds”, which included the move of a large client to two tech suppliers and the failure of another client.
Travelport, which has about $2.4bn in net debt, said it would “take steps to restructure and optimise the efficiency of our cost base”.
Under the terms of the Elliott deal, which is expected to close in the second quarter of 2019, Travelport may solicit other offers up until January 23.
Doug Steenland, Travelport chairman, said it was “a good outcome for Travelport’s shareholders” and would allow the company to “continue its work to position itself for growth in the evolving global travel industry”.
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