Amex GBT to Acquire CWT
- The acquisition of CWT by Amex GBT is valued at around $570 million on a cash-free, debt-free basis.
- The transaction is anticipated to enhance customer options, increase shareholder value, and create opportunities for growth.
- CWT is expected to bring in approximately $850 million in revenues and $70-$80 million in Adjusted EBITDA in 2024.
- The combined entity is estimated to realize synergies amounting to $155 million, with a significant portion expected to be achieved by 2025.
- Amex GBT plans to issue approximately 71.7 million shares of common stock at $6.00 per share and utilize cash reserves for the remainder of the transaction.
- The transaction is set to be completed in the second half of 2024, subject to customary closing conditions and regulatory approvals.
- The acquisition is structured to be break-even to earnings per share in the first year and accretive thereafter.
- None.
Insights
The acquisition of CWT by Amex GBT represents a significant consolidation within the business travel and meetings solutions industry. From a market perspective, the transaction's valuation metrics, such as the pre-synergy multiple of 7.6x Adjusted EBITDA and the post-synergy multiple of 2.5x, are particularly noteworthy. These figures suggest a strategic move by Amex GBT to acquire CWT at a reasonable valuation relative to future earnings potential, factoring in the synergies that are expected to materialize.
Regarding the synergy opportunities, the projected $155 million in annual run-rate synergies within three years could indicate efficiency gains and cost reductions that are substantial for the combined entity. The fact that 35% of these synergies are expected to be realized by 2025 provides a clear timeline for when stakeholders might expect to see these benefits reflected in financial statements. The market will likely monitor the integration process closely, as the success of such synergies is not guaranteed and will depend on effective post-merger integration.
The revenue multiple of 0.7x also suggests a deal that is potentially favorable for Amex GBT, especially when considering the scale and client base that CWT brings to the table. Acquiring a company for less than its annual revenue can be seen as an opportunity, provided that the acquired company's business can be maintained or grown post-acquisition.
From a financial standpoint, the acquisition's impact on Amex GBT's balance sheet and leverage is significant. Amex GBT's assertion that post-deal leverage will remain within its target range of 1.5x–2.5x is an important indicator of financial prudence. This suggests that the company is not overextending itself with this acquisition and is maintaining a conservative leverage profile, which is often favored by investors as it may reduce financial risk.
The transaction is also expected to be break-even to earnings per share in the first year post-closing and accretive thereafter. This indicates that Amex GBT's management is confident in the acquisition's ability to enhance shareholder value without diluting earnings in the short term. It will be important for investors to track the actual performance against these projections to gauge the accuracy of these predictions and the management team's ability to execute on their strategic vision.
With respect to regulatory considerations, the transaction is subject to the receipt of certain regulatory approvals, which is a standard procedure for deals of this magnitude. The timeline for closing in the second half of 2024 suggests that Amex GBT and CWT anticipate a thorough review process by regulatory bodies. Investors should be aware that such approvals are not a mere formality and can impact the timeline and even the final terms of the deal.
The shareholder lockup periods of 90 and 270 days for CWT shareholders are also of interest. These lockup periods are designed to prevent a sudden sell-off of shares post-acquisition, which could destabilize the stock price. For investors, understanding these terms is important as they can affect the stock's liquidity and price volatility following the transaction's close.
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Transaction value of approximately
$570 million - Acquisition to provide CWT customers with more choice and value
- Transaction projected to create greater capacity for investment in software and services
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Expected to deliver significant shareholder value through synergy opportunity and efficiency gains from the combination, with approximately
$155 million - Investor conference call scheduled for today at 08:30 A.M. Eastern Time
CWT serves 4,000 customers and is expected to generate approximately
Paul Abbott, Amex GBT’s CEO, said: “Bringing CWT onto the proven Amex GBT software and services model will create more choice for customers, more opportunities for people and more value for shareholders.”
After the acquisition closes, CWT customers would have access to Amex GBT’s proprietary software and services for travel and expense, including Neo1, Neo and Egencia, in addition to Select, which enables customers to integrate with leading technology partners. Customers would have access to the broadest portfolio of professional services, including meetings and events, consulting and sustainability solutions and Amex GBT’s marketplace would provide access to the most comprehensive and competitive content in the industry.
CWT CEO, Patrick Andersen, said: “Joining forces with Amex GBT helps accelerate our vision of a tech-enabled future for business travel, where people and technology combine to deliver an exceptional customer experience. We are highly confident in the value creation of the combined company.”
Significant Shareholder Value
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Highly attractive valuation and financial return: Based on CWT estimated 2024 Adjusted EBITDA of
$70 $80 million and$155 million $850 million -
Synergy opportunity: Identified approximately
$155 million 35% expected to be realized in 2025. Amex GBT has a proven track record of delivering significant synergies through acquisitions. A dedicated integration team will execute the synergy plan. - Strong balance sheet and leverage profile: Amex GBT maintains a strong balance sheet and post-deal leverage stays within Amex GBT’s target range of 1.5x–2.5x.
- Accretive transaction: Expected to be break-even to earnings per share in the first year of transaction close and accretive thereafter.
Transaction Overview
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The transaction values CWT at approximately
$570 million $6.00 50% of their shares and a 270-day lockup for the remainder of their shares. Both companies’ boards of directors have approved the transaction, which is expected to be completed in the second half of 2024, subject to the satisfaction of customary closing conditions, including the receipt of certain regulatory approvals. -
Amex GBT acquiring CWT for pre-synergy multiple of 7.6x and post-synergy multiple of 2.5x Adjusted EBITDA, based on CWT estimated 2024 Adjusted EBITDA of
$70 million $80 million and$155 million -
Amex GBT acquiring CWT for 0.7x revenue multiple, based on CWT estimated 2024 revenue of approximately
$850 million
Investor Conference Call Information
Amex GBT will hold a live investor conference call on March 25, 2024, at 8:30 AM ET. The live investor conference call and accompanying slide presentation can be accessed on the Amex GBT Investor Relations website at investors.amexglobalbusinesstravel.com. A replay of the event will be available on the website for at least 90 days following the event.
About Amex GBT
American Express Global Business Travel (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 powerful 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.
About CWT
CWT is a global business travel and meetings solutions provider, with whom companies and governments partner to keep their people connected, in traditional business locations and some of the most remote and inaccessible parts of the globe. A private company majority owned by funds affiliated to Redwood Capital Management and Monarch Alternative Capital amongst others, CWT provides its customers’ employees with innovative technology and an efficient, safe, and sustainable travel experience.
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 financial position, business strategy, and the plans and objectives of management for future operations and full-year guidance. 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
Non-GAAP Financial Measures
Adjusted EBITDA is defined as net income (loss) before interest income, interest expense, gain (loss) on early extinguishment of debt, benefit from (provision for) income taxes and depreciation and amortization and as further adjusted to exclude costs that management believes are non-core to the underlying business of the Company, consisting of restructuring, exit and related charges, integration costs, costs related to mergers and acquisitions, non-cash equity-based compensation, fair value movements on earnout and warrant derivative liabilities, long-term incentive plan costs, certain corporate costs, foreign currency gains (losses), non-service components of net periodic pension benefit (costs) and gains (losses) on disposal of businesses.
This communication contains non-GAAP financial measures related to the anticipated acquisition. Amex GBT believes these forward-looking non-GAAP measures are of interest to investors. We have not reconciled these forward-looking non-GAAP measures to their corresponding GAAP measures because certain items that impact these measures are unavailable without unreasonable efforts, out of Amex GBT’s control and/or cannot be reasonably predicted without unreasonable efforts.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240325881910/en/
Media:
AmexGBT@SloanePR.com
Investors:
Jennifer Thorington
Vice President Investor Relations
investor@amexgbt.com
Source: Global Business Travel Group, Inc.
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