American Express Global Business Travel Notes U.K. Competition and Markets Authority’s Interim Report Regarding CWT Acquisition

Rhea-AI Summary

American Express Global Business Travel (NYSE: GBTG) has received an interim report from the U.K. Competition and Markets Authority (CMA) regarding its proposed acquisition of CWT. The company strongly disagrees with CMA's assessment that the transaction could substantially lessen competition in the UK. Amex GBT argues that the CMA's report overlooks the highly competitive nature of the business travel sector and focuses incorrectly on a narrow market segment. The company plans to address the CMA's concerns while continuing to work with other regulators, including the U.S. Department of Justice. The transaction is still expected to close in Q1 2025.

Positive

• Transaction expected to create operational synergies
• Acquisition aims to increase investment and innovation capacity
• Deal projected to improve supplier distribution efficiency

Negative

• UK regulatory authority raises competition concerns
• Potential delay or complications in deal completion due to regulatory challenges
• CMA's interim assessment suggests possible market concentration issues

Insights

Legal Expert

The CMA's interim opposition to Amex GBT's acquisition of CWT represents a significant regulatory hurdle that could impact the $570 million deal's completion. The authority's concerns about market concentration in the UK business travel sector, particularly focusing on large global customers, contradicts Amex GBT's position on market competitiveness. This regulatory challenge could potentially:

• Delay the transaction beyond the projected Q1 2025 closing date
• Require structural remedies or divestments in the UK market
• Impact similar reviews by other regulators, including the U.S. DOJ

The CMA's narrow focus on a specific market segment suggests potential remedies might target services for large multinational clients. However, Amex GBT's strong pushback and emphasis on industry dynamics indicates they may pursue appeals or significant concessions to secure approval.

Market Research Analyst

The regulatory pushback highlights deeper market structure concerns in the business travel management industry. The transaction would combine two of the largest global TMCs, potentially creating significant market concentration in enterprise-level services. Current market dynamics show:

• Increasing consolidation among major players
• Growing competition from digital-first entrants
• Evolving customer needs post-pandemic

The CMA's position suggests heightened scrutiny of consolidation in business services sectors, particularly where large enterprise customers are concerned. This could impact future M&A activity in the industry and potentially slow the pace of consolidation among major travel management companies.

NEW YORK--(BUSINESS WIRE)-- American Express Global Business Travel, which is operated by Global Business Travel Group, Inc. (NYSE: GBTG) (“Amex GBT” or the “Company”), a leading software and services company for travel, expense and meetings & events, has confirmed today that the U.K. Competition and Markets Authority (the “CMA”) has published its interim report regarding Amex GBT’s proposed acquisition of CWT, a global business travel and meeting solutions provider. Amex GBT fundamentally disagrees with the CMA’s interim assessment that the transaction may result in a substantial lessening of competition in the UK and it will continue to work collaboratively with the CMA to demonstrate that the transaction should be approved by the CMA.

The Company believes that the CMA’s interim report does not reflect the evidence presented on the highly competitive and dynamic nature of the business travel sector. Instead, the CMA has erroneously focused on a narrow segment that makes up a small fraction of business travel spend. The CMA has ignored multiple sources of evidence that show clearly that Amex GBT consistently competes for all customers, including the largest global customers, with numerous other travel management companies that operate globally.

Amex GBT will respond to the interim report to correct several errors and misconceptions about how the business travel sector operates and to demonstrate that the CWT acquisition will not harm competition in the UK or elsewhere. The acquisition of CWT will create synergies and provide greater capacity for investment and innovation. It will also create more choice for customers and more efficient distribution for suppliers while maintaining a highly competitive environment for business travel services.

Amex GBT will in parallel continue to work collaboratively with other regulators, including the Antitrust Division of the U.S. Department of Justice, in their review of the transaction. The Company continues to expect the transaction to close in the first quarter of 2025.

Eric J. Bock, Amex GBT’s Chief Legal Officer and Global Head of M&A, said: “We are disappointed by the CMA’s interim report. The CMA has not appreciated the evidence that reflects the breadth of the business travel industry and its dynamic and competitive nature. In recent years, numerous travel management companies have expanded their offerings while other companies have entered the industry and are rapidly growing their businesses. We are reviewing the interim report closely and will be responding to the CMA’s concerns. We firmly believe that the proposed transaction would result in many customer and supplier benefits and that the business travel industry would remain highly competitive. We will be engaging further with the CMA to demonstrate why its concerns are not justified.”

About Amex GBT

Amex GBT is a leading software and services company for travel, expense, and meetings & events. We have built the most valuable marketplace in travel with the most comprehensive and competitive content. A choice of solutions brought to you through a strong combination of technology and people, delivering the best experiences, proven at scale. With travel professionals and business partners in more than 140 countries, our solutions deliver savings, flexibility, and service from a brand you can trust – Amex GBT.

Visit amexglobalbusinesstravel.com for more information about Amex GBT. Follow @amexgbt on X, LinkedIn and Instagram.

Forward-Looking Statements

This communication contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding our current expectations or forecasts of future events. These statements constitute projections, forecasts and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this communication are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us, including as a result of the transaction, will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors: (1) changes to projected financial information or our ability to achieve our anticipated growth rate and execute on industry opportunities; (2) our ability to maintain our existing relationships with customers and suppliers and to compete with existing and new competitors; (3) various conflicts of interest that could arise among us, affiliates and investors; (4) our success in retaining or recruiting, or changes required in, our officers, key employees or directors; (5) factors relating to our business, operations and financial performance, including market conditions and global and economic factors beyond our control; (6) the impact of geopolitical conflicts, including the war in Ukraine and the conflicts in the Middle East, as well as related changes in base interest rates, inflation and significant market volatility on our business, the travel industry, travel trends and the global economy generally; (7) the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs; (8) the effect of a prolonged or substantial decrease in global travel on the global travel industry; (9) political, social and macroeconomic conditions (including the widespread adoption of teleconference and virtual meeting technologies which could reduce the number of in-person business meetings and demand for travel and our services); (10) the effect of legal, tax and regulatory changes; (11) the decisions of market data providers, indices and individual investors; (12) the outcome of any legal proceedings that may be instituted against Amex GBT or CWT in connection with the transaction; (13) the inability to complete the transaction; (14) delays in obtaining, adverse conditions contained in, or the inability to obtain necessary regulatory approvals or complete regulatory reviews required to complete the transaction; (15) the risk that the transaction disrupts current plans and operations as a result of the announcement and consummation of the transaction; (16) the inability to recognize the anticipated benefits of the transaction, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees; (17) costs related to the transaction; (18) risks related to the business of CWT or unexpected liabilities that arise in connection with the transaction or the integration with CWT; (19) the risk that the assumptions, estimates and estimated adjustments described in this communication may prove to be inaccurate; and (20) other risks and uncertainties described in the Company's Form 10-K, filed with the SEC on March 13, 2024, and in the Company's other SEC filings. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106563071/en/

Investors:

Jennifer Thorington

Vice President Investor Relations

investor@amexgbt.com



Media:

Martin Ferguson

Vice President Global Communications and Public Affairs

martin.ferguson@amexgbt.com

Source: Global Business Travel Group, Inc.

FAQ

What did the CMA say about GBTG's acquisition of CWT?

The CMA's interim report suggests the acquisition may result in a substantial lessening of competition in the UK business travel market.

When is GBTG expected to complete the CWT acquisition?

The transaction is expected to close in the first quarter of 2025.

How did GBTG respond to the CMA's interim report?

GBTG fundamentally disagreed with the assessment, stating the CMA overlooked evidence of the sector's competitive nature and will work to address their concerns.

What are the expected benefits of GBTG's acquisition of CWT?

The acquisition is expected to create synergies, increase investment capacity, provide more customer choice, and improve supplier distribution efficiency.