American Express is in
ongoing discussions with regard to a proposed joint venture in which it would
share the ownership of the joint venture with an investor group led by
Certares, a firm headed by senior management with significant experience in the
travel industry. It is expected that GBT’s operations, business relationships
and other assets would be held and operated by the joint venture entity. The
joint venture transaction is expected to create greater investment capacity for
GBT to further enhance its suite of products and services, attract new
customers and grow internationally to deliver additional value to customers.
As presently contemplated,
American Express would maintain a 50% ownership stake in the joint venture,
which would continue to operate under the American Express Global Business
Travel brand, while an investor group led by Certares would own the remaining 50%
interest. The investor group would invest a sum in the range of $700 million to
$1 billion, which would be used by the joint venture to grow the GBT business.
Subject to the execution of definitive agreements and receipt of requisite
regulatory and other approvals, the transaction would be expected to close in
the second quarter of 2014, at which time American Express would expect to
recognize again.
It is also anticipated
that GBT employees would transition to the new structure which, upon closing,
would be managed by a board of directors that would include representatives
appointed by American Express and the investor group, as well as selected
independent directors. As the parties work toward completion of the
transaction, the GBT management team will remain in place and focused on
serving the needs of GBT’s business customers.
American Express also expects to execute comprehensive commercial
agreements to provide uninterrupted service and close coordination for mutual
customers of GBT and American Express’ other business units.
“We’ve been making strong
progress in our efforts to transform our corporate travel business,” said
Stephen J. Squeri, Group President, Global Corporate Services, American
Express. “The first phase of this transformation, announced earlier this year,
has been focused on reducing the cost structure within GBT through our
technology and infrastructure advances. The joint venture we plan to form
represents the next phase of the transformation, which is aimed at accelerating
the growth of this business through additional investments that would be used
to develop new products, services and capabilities that we expect will help us
meet the evolving needs of our current customers, attract new ones, and
continue to build our international business. We anticipate that the expansion
of our business travel offerings will not only help us grow GBT, but it would
also provide additional value to our corporate payments customers,which would
help us accelerate growth in that business as well. We believe this structure
will provide superior opportunities for delivering customer benefits, retaining
world-class talent and achieving long-term success.”
Travel has been an
integral part of American Express for more than one hundred years, and maintaining
a strong presence in the business travel industry is of strategic value to the
Company. GBT has operations and network partners in 138 countries worldwide and
offers a comprehensive network, service dependability, and deep insight to
customers representing more than $19 billion in corporate travel spend. The new
joint venture would be positioned to utilize its own funds to invest in the
business while still maintaining and benefitting from the customer benefits of
a link to American Express’ other business units, such as Global Corporate
Payments, which issues the American Express Corporate Card and provides
business-to-business payment solutions.
American Express’ consumer
travel business, which provides Card Members and other consumers with travel benefits
and services, would not be part of the proposed transaction.
