~HeadShot~
Skilled
Sabre to buy UK's Lastminute.com
LONDON - U.S. group Sabre Holdings Inc. has agreed to buy Britain's Lastminute.com Plc for 577 million pounds ($1.1 billion) to add to its Travelocity brand and create Europe's biggest online travel retailer.
Sabre said on Thursday it was paying 165 pence a share in cash for the former darling of the dot.com boom, about 57 percent above Lastminute's closing price on Tuesday, the day before the British firm said it had received a bid approach.
But analysts said there was still a chance that rival U.S. groups IAC/InterActiveCorp , which owns the Expedia travel Web Site, or Cendant Corp , which agreed to buy Britain's Ebookers last year, might launch a counter bid.
"It's a fair price. But there's a strategic logic in trying to block a competitor and so I think there's an outside chance of a counter bid," said Robin Chhabra at Evolution Securities.
Lastminute Chairman Brian Collie said he could not rule out a counter offer as the firm had attracted plenty of interest over recent years, but added the deal with Sabre was compelling.
"This is the only offer we've ever had, and it's a very good one," he told reporters.
At 0900 GMT, Lastminute shares were up 9.2 percent at 167p, just above the offer price, after touching a 10-month peak of 172p, suggesting some investors are hopeful of a higher bid.
Sabre said buying Lastminute would strengthen its negotiating position with global airline and hotel companies, allowing it to offer better deals to customers.
Chairman Sam Gilliland said the U.S. group expected to make an undisclosed amount of cost and revenue savings from the deal, but that these were likely to come from operational efficiencies rather than job cuts.
INTERNET ICON
Lastminute, which sells holidays and flights over the Internet at short notice, became synonymous with the Internet boom in Britain when 27-year-old Martha Lane Fox and business partner Brent Hoberman floated its shares at 380p in March 2000.
Some 190,000 small investors applied to buy the shares and had to be restricted to just 35 each because demand was so high.
After a brief surge to a peak of 555p, however, the stock tumbled to just 17p over the following years as the technology bubble burst and customers cut back on travel in the global economic downturn which followed.
Since the fall, Lastminute has continued to expand, spending more than 260 million pounds over the past four years on 14 acquisitions. But it has been long tipped as a takeover target as bigger U.S. rivals also looked to consolidate the market.
Hoberman, still Lastminute chief executive, stands to make around 26 million pounds from the deal with Sabre from his 4.6 percent shareholding and will stay on to run the combined Lastminute and Travelocity business in Europe.
Lane Fox, who stood down as managing director in 2003, is in line for around 13.5 million pounds for her 2.4 percent stake.
Evolution's Chhabra said Sabre was offering around 3.3 times Lastminute's gross profit, a small premium to the three times paid by Cendant for the online business of Ebookers last year.
But he said Lastminute had a better brand. "It deserves a premium. The question is whether it is big enough."
Lastminute also posted results showing a loss per share before goodwill of 3.62 pence for the six months to March 31, against a loss of 3.99p in the same period the year before, with total transactions up 57 percent at 325.4 million pounds.
The forward order book was 147.9 million pounds at March 31, up from 80.4 million the year before, and the firm said it had continued to trade well in April.
But analysts at Bridgewell Securities said Lastminute faced strong competition from airlines, which are increasingly selling tickets through their own Web Sites, and advised investors to sell the shares in case the deal with Sabre fell through.
Morgan Stanley advised Sabre on the deal, while Lastminute was advised by Merrill Lynch and UBS.
($1=.5305 Pound)
[RANK="www.eweek.com/article2/0,1759,1815491,00.asp"]Source[/RANK]
LONDON - U.S. group Sabre Holdings Inc. has agreed to buy Britain's Lastminute.com Plc for 577 million pounds ($1.1 billion) to add to its Travelocity brand and create Europe's biggest online travel retailer.
Sabre said on Thursday it was paying 165 pence a share in cash for the former darling of the dot.com boom, about 57 percent above Lastminute's closing price on Tuesday, the day before the British firm said it had received a bid approach.
But analysts said there was still a chance that rival U.S. groups IAC/InterActiveCorp , which owns the Expedia travel Web Site, or Cendant Corp , which agreed to buy Britain's Ebookers last year, might launch a counter bid.
"It's a fair price. But there's a strategic logic in trying to block a competitor and so I think there's an outside chance of a counter bid," said Robin Chhabra at Evolution Securities.
Lastminute Chairman Brian Collie said he could not rule out a counter offer as the firm had attracted plenty of interest over recent years, but added the deal with Sabre was compelling.
"This is the only offer we've ever had, and it's a very good one," he told reporters.
At 0900 GMT, Lastminute shares were up 9.2 percent at 167p, just above the offer price, after touching a 10-month peak of 172p, suggesting some investors are hopeful of a higher bid.
Sabre said buying Lastminute would strengthen its negotiating position with global airline and hotel companies, allowing it to offer better deals to customers.
Chairman Sam Gilliland said the U.S. group expected to make an undisclosed amount of cost and revenue savings from the deal, but that these were likely to come from operational efficiencies rather than job cuts.
INTERNET ICON
Lastminute, which sells holidays and flights over the Internet at short notice, became synonymous with the Internet boom in Britain when 27-year-old Martha Lane Fox and business partner Brent Hoberman floated its shares at 380p in March 2000.
Some 190,000 small investors applied to buy the shares and had to be restricted to just 35 each because demand was so high.
After a brief surge to a peak of 555p, however, the stock tumbled to just 17p over the following years as the technology bubble burst and customers cut back on travel in the global economic downturn which followed.
Since the fall, Lastminute has continued to expand, spending more than 260 million pounds over the past four years on 14 acquisitions. But it has been long tipped as a takeover target as bigger U.S. rivals also looked to consolidate the market.
Hoberman, still Lastminute chief executive, stands to make around 26 million pounds from the deal with Sabre from his 4.6 percent shareholding and will stay on to run the combined Lastminute and Travelocity business in Europe.
Lane Fox, who stood down as managing director in 2003, is in line for around 13.5 million pounds for her 2.4 percent stake.
Evolution's Chhabra said Sabre was offering around 3.3 times Lastminute's gross profit, a small premium to the three times paid by Cendant for the online business of Ebookers last year.
But he said Lastminute had a better brand. "It deserves a premium. The question is whether it is big enough."
Lastminute also posted results showing a loss per share before goodwill of 3.62 pence for the six months to March 31, against a loss of 3.99p in the same period the year before, with total transactions up 57 percent at 325.4 million pounds.
The forward order book was 147.9 million pounds at March 31, up from 80.4 million the year before, and the firm said it had continued to trade well in April.
But analysts at Bridgewell Securities said Lastminute faced strong competition from airlines, which are increasingly selling tickets through their own Web Sites, and advised investors to sell the shares in case the deal with Sabre fell through.
Morgan Stanley advised Sabre on the deal, while Lastminute was advised by Merrill Lynch and UBS.
($1=.5305 Pound)
[RANK="www.eweek.com/article2/0,1759,1815491,00.asp"]Source[/RANK]