American Express Co. (AXP:US) agreed to sell a 50 percent stake in its business-travel division for $900 million as it seeks to boost revenue from corporate bookings.
AmEx will create a joint venture with an investor group formed by Certares International Bank LLC that includes Qatar Holding LLC and funds managed by BlackRock Inc. and Macquarie Capital, according to a statement yesterday from AmEx and the Qatari fund. The business will use the American Express brand and be headed by Bill Glenn, formerly the New York-based firm’s president of global commercial services. The consumer-travel operation isn’t part of the deal.
AmEx, the biggest credit-card issuer by purchases, faces a slowdown in travel revenue as customers rely more on digital technology for bookings. Travel commissions and fees -- including consumer and business sales -- declined about 2.9 percent since 2011 to $1.9 billion at the end of last year. AmEx said in September it was considering creating the joint venture in a deal valued at $700 million to $1 billion.
“There’s not a joint venture in the travel industry that could raise this kind of capital,” Glenn, who’s now chief executive officer of global business travel, said in a telephone interview. “If we’re focused on delivering value to our customers and our suppliers and our partners using the capital infusion to invest in technology and information and our global footprint, we’ll be very, very successful.”
AmEx rose 1.2 percent to $91.26 yesterday in New York and has increased less than 1 percent this year.
Among the investors, Qatar Holding will have the largest stake, followed by funds managed by BlackRock (BLK:US), said a person with direct knowledge of the matter who asked not to be identified because the talks are private. AmEx said it gets a 50% ownership stake in the joint venture, and the others hold the remaining half in exchange for the $900 million investment.
The business-travel unit employs more than 14,000 people, operates in 139 countries and handles more than $19 billion in spending, the companies said. The firms expect the deal to be completed in the second quarter, and AmEx said it may invest some proceeds in “growth initiatives.”
Qatar Holding is a subsidiary of the Qatar Investment Authority, which controls more than $100 billion of assets, and is among the biggest shareholders in Barclays Plc and Credit Suisse Group AG. New York-based Certares is led by Michael Gregory O’Hara, a former chief investment officer of JPMorgan Chase & Co.’s special investments group. He’ll be chairman of the joint venture, the firms said.
“American Express Global Business Travel is a truly global operation with clear benefits for our investment portfolio, across multiple regions and sectors,” Qatar Investment Authority CEO Ahmad Al-Sayed said in the statement.
UBS AG and Lazard Ltd. are advising AmEx while Credit Suisse is working for the investor group, according to the statements.
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