Sabre sweetens Travelocity offer
Raising the offer by $5 a share is enough to satisfy the travel site's board of directors, which says shareholders should approve the deal to sell its remaining shares to Sabre.
Travelocity's Special Committee said Monday that the new offer of $28 per share compared with the previous offer of $23 per share was "adequate." The company's board recommended that shareholders approve the deal, although one member voted against the plan, and the six other directors abstained. The official board vote was 2-1 in favor of Sabre.
Sabre, a company that provides technology for the travel industry, also said it was settling pending shareholder lawsuits filed to prevent Travelocity from accepting the original offer. Travelocity shares gained $1.01 to $27.91 in early trading.
Sabre, which already owns 70 percent of Travelocity, announced plans earlier this month to snap up the rest of the company, but hit a snag when the Special Committee, an independent committee charged by Travelocity with reviewing the offer, complained. The committee said Sabre's offer of $23 per share "would constitute an opportunistic attempt to acquire Travelocity at a time when its stock price is temporarily depressed."
The proposed deal illustrates a boomerang effect of sorts. Though spinning off dot-com divisions was all the rage in 1999, bringing them back in-house is the trend now.
Many companies, which had partially spun off money-losing Internet divisions to cash in on the dot-com boom, are increasingly buying them back, now that they have proven they can be profitable.
Network Associates, which makes security software, said late Sunday that it would reacquire outstanding shares of antivirus site McAfee.com. Shareholders would be given 0.675 shares of Network Associates stock in exchange for each share of Class A McAfee.com stock. That news drove shares of McAfee.com up $2.46 to $18, or 16 percent, in early trading, bringing shares in line with Network Associates' offer, which is worth about $18.65 a share.
Earlier this month, IOS Brands, parent company of florist FTD, announced plans to bring the FTD.com division back in-house.
Though some dot-com companies, like many of their former employees, have gone back to their parents in search of money, that scenario is not always the case. Travelocity and FTD.com are actually profitable; both the companies and some analysts said the combinations were simply an acknowledgement of changes in the broader market.
"It's just that the industry environment changed such that it made more sense to have it owned entirely by Sabre," Legg Mason analyst Thomas Underwood said. "It allows Sabre to effectively address a couple of major changes that are occurring within the travel industry, (including) the integration of agencies and global distribution system companies. And it enables Travelocity to address the corporate market effectively should they decide to."