Sabre to buy Farelogix for $360M
Sabre have agreed to purchase Farelogix for $360M. The rumours have been swirling in the market on the future of Farelogix for some time and now we know the outcome. T2RL believe there would have been a very competitive bidding process managed expertly by Evercore and the Farelogix board. T2RL see the timing of this purchase as good for Sabre. Whilst there is no doubt the valuation will be the subject of scrutiny, Sabre get some excellent client contracts and services to compete aggressively in the airline retail merchandising space. Whilst the Farelogix solution is PSS-agnostic the purchase, if approved will help Sabre build a compelling stack of services focussed on revenue generation “offer management”. Sabre will be able to inject their revenue management expertise for optimising the offers and be able to provide an industry compliant order management infrastructure. It is also T2RL's view that Jim Davidson and his team were ‘just a DCS away’ from building the core capabilities necessary for a competitive PSS offer so T2RL consider this as both an offensive move into NDC and merchandising and a defensive move in terms of revenue retention from existing customers. The bottom line is that there will be no reason or far fewer reasons for airlines to move away from Sabre’s PSS given the stack of capabilities on offer. This may just be the reason the Sabre management and board agreed to pay such a multiple of earnings for the asset.
Published: 14 November 2018
Sabre Corporation has announced in a media call today that it has entered into an agreement to acquire Farelogix, which operates NDC order delivery technology used by many of the world’s leading airlines. Sabre expects that, upon close, the acquisition will allow the company to accelerate delivery of its end-to-end NDC-enabled retailing, distribution and fulfillment solutions. Based in Miami, Farelogix provides a suite of SaaS solutions that enables carriers to dynamically create, control, optimise and deliver personalised and differentiated offers across sales channels. These airline-controlled retailing, merchandising and distribution capabilities complement Sabre’s existing retailing and merchandising solutions and future product roadmap, as noted during the announcement. “Accelerate our plans to deliver future-ready retailing, distribution and fulfillment solutions” Sean Menke, president and CEO of Sabre, said: “Farelogix’s investments in offer management and NDC order delivery will help us accelerate our plans to deliver future-ready retailing, distribution and fulfillment solutions that unlock increased value for the industry. “By integrating Farelogix’s capabilities into Sabre’s leading airline technology platform, we’ll be able to offer the innovative and comprehensive solutions that airlines require, backed by best-in-class technology and the deep expertise that our teams bring to market.” Building upon Farelogix’s GDS- and PSS-agnostic capabilities, Sabre now expects to drive faster innovation in the airline IT space, in particular towards its Beyond NDC programme. At closing, Sabre will purchase Farelogix for approximately $360 million, funded by cash on hand and revolver borrowing. Farelogix expects full year 2018 revenue of approximately $40 million. The acquisition is expected to be neutral to Sabre’s 2019 Adjusted EPS. Jim Davidson, CEO of Farelogix, added: “For the past few years, Farelogix and Sabre have worked together with shared customers to implement our complementary technologies to solve some of the industry’s toughest challenges. Today’s announcement is a natural evolution of the successful, ongoing collaboration between our two companies. “Sabre shares our vision for innovation and has the leading technology, resources, and global presence to help us scale our solutions and grow our customer base.” The acquisition and integration of Farelogix technology will help Sabre accelerate its innovation efforts, particular towards its Beyond NDC programme. At closing, Sabre will purchase Farelogix for approximately $360 million, funded by cash on hand and revolver borrowing. Farelogix expects full year 2018 revenue of approximately $40 million. The acquisition is expected to be neutral to Sabre’s 2019 Adjusted EPS. The acquisition is subject to customary closing conditions and regulatory approvals and is expected to close in late 2018 or early 2019. Until closing, Sabre and Farelogix will continue to operate as separate businesses with no immediate changes to daily operations. Source: https://www.traveldailymedia.com/sabre-to-acquire-farelogix/