American Express Co. (AXP:US) is in talks to spin off half of its business-travel unit in a joint venture with Certares International Bank LLC, resulting in a one-time gain for the credit-card lender.
An investor group led by Certares would inject $700 million to $1 billion in return for a 50 percent stake, New York-based AmEx said today in a statement. The deal could be completed in the second quarter of 2014.
American Express, the biggest U.S. credit-card issuer by purchases, said it would cut 5,400 jobs this year, mostly in travel services, as consumers and businesses rely more on digital technology for bookings. Commissions and fees fell 5 percent to $495 million in the second quarter from a year earlier amid a slide in global sales, the firm said in July.
“We’ve been making strong progress in our efforts to transform our corporate travel business,” Stephen J. Squeri, group president, global corporate services, said in the statement.
Certares is led by Michael Gregory “Greg” O’Hara, a former chief investment officer of JPMorgan Chase & Co.’s special investments group, according to Certares’s website. AmEx’s global business-travel employees would move to the new unit and be managed by a board of directors composed of executives from AmEx and the investor group.
American Express climbed 0.6 percent to $76.50 at 10:55 a.m. in New York. The shares have surged 33 percent this year, outpacing the 23 percent advance for 81-company Standard & Poor’s 500 Financials Index.
The business-travel group has operations and network partners in 138 countries and serves corporate customers that spend more than $19 billion a year, the lender said in the statement. Travel commissions and fees fell 2 percent last year to $1.94 billion from 2011, according to a financial supplement.
The joint venture will allow AmEx to make investments in its business-travel division to develop products and services for corporate clients, the company said. Senior managers at New York-based Certares have “significant experience in the travel industry,” American Express said without elaborating.
UBS AG (UBSN) is the lead adviser to AmEx on the deal.
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