Travelport Ltd. and Worldspan, L.P. to Merge to Create Leading Travel Solutions Company
Demands for Lower Travel Distribution Costs, Enhanced Customer Service, and Technology Innovation Give Flight to Merger
NEW YORK AND ATLANTA – December 7, 2006 – Travelport Ltd. and Worldspan, L.P. announced today a definitive agreement to merge Worldspan into a subsidiary of Travelport to create a leading global travel solution provider.
“Increasing cost pressures on travel suppliers and agencies combined with the strengthening of alternative distribution channels, such as supplier direct channels, continue to influence how travel is purchased,” said Jeff Clarke, Chief Executive Officer of Travelport. “This merger will create a more effective and efficient travel distribution provider and will ensure that we are better positioned to meet the evolving needs of our customers, the travel suppliers, travel agencies and end consumers.”
As the travel industry continues to grow at a substantial rate, travel suppliers and agencies require the technology and networks capable of handling the increased demand. Competition in the travel distribution industry has increased, driven in part by travel bookings via alternative travel distribution channels. According to Forrester Research, more than half of US travel bookings are already processed through alternative non-GDS channels. Globally, sales from supplier direct websites are expected to continue to grow as airlines encourage direct bookings through frequent flyer programs, exclusive fares and potentially through removal of content from the GDSs. The combination of Travelport and Worldspan addresses the increasing demands of the travel distribution industry and supports the need for cost-effective and efficient GDS offerings.
“This merger builds upon the complementary strengths of our two companies, which will benefit existing and future customers, allowing them to address an increasingly competitive marketplace,” said Rakesh Gangwal, Chairman, President and Chief Executive Officer of Worldspan. “The combination of Travelport and Worldspan directly addresses industry trends and will provide a new standard of technology, high quality content and world-class customer service.”
Currently, more than 750 travel suppliers, 63,000 travel agencies and millions of end consumers globally benefit from the travel distribution services provided by the two organizations. The transaction brings together two companies with global footprints and a proven track record of customer service and technology leadership. Worldspan will further augment Travelport’s global breadth and diversity and will enhance Travelport’s technology platform, in particular in the online distribution segment.
In addition to the numerous customer benefits, Travelport and Worldspan expect the proposed transaction to deliver financial benefits capitalizing on natural operational synergies. The initial integration focus will be on consolidating technology and administrative operations resulting in near-term cost savings of approximately $50 million. Management also sees opportunity to cross-sell Worldspan’s technology products to Travelport’s global customer base.
Jeff Clarke will lead the combined company as Chief Executive Officer. Prior to the closing, Rakesh Gangwal will continue to lead Worldspan and will be leaving the company following the completion of the merger. Additionally, the companies have established an integration planning team. The Travelport and Worldspan integration team will include Terry Conley, Chief Administrative Officer of Travelport; Pat Bourke, Chief Re-Engineering Officer of Travelport; and Kevin Mooney, Chief Financial Officer of Worldspan.
The proposed transaction values Worldspan at $1.4 billion. Simultaneously with the execution of the merger agreement, Worldspan completed a recapitalization plan. As part of this recapitalization plan, Travelport loaned $125 million to Worldspan in exchange for a payment in kind (PIK) note which Travelport funded through cash on hand. In addition, one of Travelport’s parent companies also loaned Worldspan $125 million in exchange for a PIK note. The transaction has been unanimously approved by the boards and major shareholders of both companies but consummation of the transaction remains subject to customary conditions to closing including regulatory approval.
Credit Suisse, Lehman Brothers and UBS acted as financial advisors to Travelport on the transaction.
Travelport will host a teleconference with a simultaneous webcast at 11:00 a.m. Eastern Time to discuss today’s announcement. To access the teleconference, please dial 866-383-8119 (domestic) or 617-597-5344 (international), access code 75964686, or listen to it live via the Internet by accessing the Company’s Web site (www.travelport.com). For those unable to listen to the live broadcast, a replay will be available on the Company’s Web site or by dialing 888-286-8010 (domestic) or 617-801-6888 (international), playback access code 16774282, beginning approximately one hour after the conclusion of the call and available through December 14, 2006.
About Travelport
Travelport is one of the world’s largest travel conglomerates. It operates 20 leading brands including Galileo, a global distribution system (GDS); Orbitz, an online travel agent; and Gulliver’s Travel Associates, a wholesaler of travel content. With 2005 revenues of $2.4 billion, the Company has 8,000 employees and operates in 130 countries. Travelport is a private company owned by The Blackstone Group of New York and Technology Crossover Ventures of Palo Alto, California.
About Worldspan, L.P.
Worldspan is a leader in travel technology services for travel suppliers, travel agencies, e-commerce sites and corporations worldwide. Utilizing some of the fastest, most flexible and efficient networks and computing technologies, Worldspan provides comprehensive electronic data services linking thousands of travel suppliers around the world to a global customer base. Worldspan offers industry-leading Fares and Pricing technology such as Worldspan e-Pricing®, hosting solutions and customized travel products. Worldspan enables travel suppliers, distributors and corporations to reduce costs and increase productivity with technology like Worldspan Go!® and Worldspan Trip Manager® XE. Worldspan, headquartered in Atlanta, Georgia, is a private company owned by Court Square Capital Partners and Ontario Teachers’ Pension Plan. Additional information is available at Worldspan.com.
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements” that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “may fluctuate” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.
Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to: our substantial indebtedness, our ability to service such indebtedness and the impact thereof on the way we operate our business; interest rate movements; factors affecting the level of travel activity, particularly air travel volume; general economic and business conditions; competition in the travel industry; pricing, regulatory and other trends in the travel industry; risks associated with doing business in multiple international jurisdictions and in multiple currencies; maintenance and protection of our information technology and intellectual property; risks relating to our separation from Cendant; the outcome of pending litigation; financing plans and access to adequate capital on favorable terms; and our ability to achieve anticipated cost savings. Other unknown or unpredictable factors also could have material adverse effects on our performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except to the extent required by applicable securities laws, the Company undertakes no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless required by law.