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Sabre scoops up online travel marketplace for $757 million

The reservation specialist agrees to pay $757 million for online exchange GetThere and plans to save $100 million a year by cutting roughly 1,200 jobs.

Aiming to capture a larger slice of the online travel market, Sabre Holdings today said it has agreed to buy online travel marketplace GetThere in a cash deal worth about $757 million.

Menlo Park, Calif.-based GetThere operates a marketplace that connects businesses with travel suppliers and leisure services over the Web. Sabre said it plans to combine GetThere with its own Business Travel Solutions (BTS) unit and operate the combined unit as GetThere.

The acquisition will bring together a list of big-name clients including corporate giants Boeing, Chevron, Cisco Systems, Citicorp, Dell Computer, General Electric, Lucent Technologies, Nike and Nortel Networks. The combined businesses will have estimated revenues of $50 million this year.

The new company will be based in Menlo Park and led by Gadi Maier, GetThere's chief executive officer. Maier will report to Sabre chief executive William Hannigan.

Separately, Sabre also announced today plans to cut roughly 1,200 jobs over the next several months through a combination of attrition and layoffs. The move is expected to bring annual savings of $100 million beginning next year, the company said.

The online travel market is on an explosive growth track. Internet research firm Jupiter Communications expects the industry for Web-based sales in leisure and business travel to reach $28 billion in five years. Despite the impressive figures, the steep climb is expected to level off by 2005. Market consolidation is already under way.

Fort Worth, Texas-based Sabre, which has made a name for itself in the online travel industry, owns Travelocity.com, another online travel site that's made some noise in the market. In March, Travelocity completed its $644.9 million merger with Preview Travel, which offers vacation planning services and booking features. Earlier this month, Sabre acquired Gradient Solutions, a Dublin, Ireland-based company that provides e-commerce products to the travel industry.

Late last year, Travelocity, Preview Travel and Priceline.com formed a marketing alliance to compete with Microsoft travel spinoff Expedia, one of the most visited sites on the Web.

Sabre runs one of the largest computer-based reservation systems for travel agents. The company was formerly owned in part by AMR, the parent company of American Airlines. Last December, AMR spun off its 83 percent share of Sabre in an effort to stake its claim in the Net economy. As part of the deal, Sabre will continue to provide reservation services and other real-time services to American Airlines until 2008.

Under the terms of today's agreement, which was unanimously approved by GetThere's board, the deal will include a tender offer, which will begin during the week of Sept. 4. Sabre said it will pay for all outstanding shares of GetThere's common stock at $17.75 per share, or $757 million. The transaction is expected to close in the fourth quarter of this year pending regulatory clearance and customary closing conditions.