Two global business in business travel management, Carlson Wagonlit Travel (CWT), and Navigant International, Inc. doing business as TQ3Navigant (Navigant), announced that they have signed a…
Two global business in business travel management, Carlson Wagonlit Travel (CWT), and Navigant International, Inc. doing business as TQ3Navigant (Navigant), announced that they have signed a definitive agreement whereby CWT will acquire all outstanding shares of Navigant for $16.50 per share.
The aggregate transaction value, including the assumption of debt, is approximately $510 million. The acquisition price represents a premium of 25 percent over the closing price of $13.20 per Navigant share on April 26, 2006, and a 38-percent premium over Navigant’s average share price for the 60 days leading up to the announcement. The transaction has been approved by the boards of both companies and is expected to close in the second half of 2006.
This strategic acquisition doubles CWT’s size in North America, strengthening its presence in key regional markets. It also expands CWT’s presence in Asia Pacific, through Navigant’s operations in Australia and New Zealand. Altogether, CWT will be the number one travel management company outside of North America and a strong number two in North America, in what remains a fragmented market. As a result of the transaction, CWT will generate annual gross volume in excess of $26 billion1 and net revenues of more than $1.6 billion, based on 2005 results. The combined company will operate in more than 150 countries and have approximately 22,000 employees.
This announcement coincides with a related transaction, also announced today, under which Minneapolis-based Carlson Companies and One Equity Partners (OEP), a private equity affiliate of JPMorgan Chase & Co., agreed to acquire the 50-percent interest in CWT held by Paris-based Accor for $465 million. Upon completion of this transaction, Carlson will increase its stake in CWT to 55 percent, while OEP will own 45 percent. This transaction is expected to close after receipt of regulatory approval.
Hubert Joly, president and chief executive officer of CWT, said, “Navigant is an important acquisition for CWT that greatly strengthens our competitive position in North America and in Asia Pacific. It builds upon our momentum and expands CWT’s leadership in the business travel market, where our globally integrated, professiprofessional services model is delivering great value to our clients.”
Mr. Joly added, “We are pleased that One Equity Partners is investing in CWT and that Carlson Companies is continuing its support. We appreciate their strong confidence in the future of the business travel sector and CWT, in particular. We look forward to benefiting from both their financial and strategic support as we continue to grow.”
Ed Adams, Navigant’s chairman and chief executive officer, said, “This is an excellent transaction for our shareholders, customers and employees. The business travel sector is experiencing a period of consolidation and aligning with the leaders of the future is the right decision for all of our stakeholders. I am confident that by combining forces with CWT, whose management I know and respect, our investors, our clients and our employees will be well served.”
CWT will embark upon the integration of Navigant after seven successful acquisitions in the past two years. Mr. Joly said, “The combined leadership team will focus on ensuring that current clients of both companies continue to receive superior service, while a separate, dedicated team will lead the integration to guarantee a smooth transition for all clients and employees.”
Mr. Joly will continue to serve as president and chief executive officer of CWT. Mr. Adams has agreed to support Mr. Joly as the companies complete this transition. Once the transition has been completed, Mr. Adams will pursue other opportunities after 27 successful years in the travel industry. Bob Griffith, Navigant’s chief financial officer and chief operating officer, will take on a new role as executive vice president within the combined company, reporting to Jack O’Neill, who will continue as chief operating officer of CWT North America. Other key members of the CWT and Navigant management teams are expected to continue as senior executives within the combined organization.
“We look forward to working with Navigant’s strong team and clients to ensure that the integration of the two companies is smooth and mutually beneficial,” Mr. Joly said.
CWT has obtained commitments from JPMorgan, Lehman Brothers and Morgan Stanley, which, together with its cash and cash equivalents on hand, are sufficient to satisfy in full the cash consideration payable to Navigant shareholders under the terms of the agreement.
The transaction is subject to a number of closing conditions, including approval by Navigant’s shareholders, regulatory approvals, financing, the closing of the Accor/Carlson Companies/One Equity Partners transaction, and other customary conditions.
Advisors
JPMorgan is acting as financial advisor to Carlson Wagonlit Travel and Wachtell, Lipton, Rosen & Katz is serving as its legal counsel. The Blackstone Group L.P. is acting as financial advisor to Navigant and Shearman & Sterling LLP is serving as its legal counsel.
In response to CWT`s acquisition of Navigant`s share, American Express Business Travel released the following statement from Charles Petruccelli, President, Global Travel Services, American Express:
These industry announcements continue to demonstrate the strength and buoyancy of the travel management industry – a market considered all but dead only a few short years ago.
The recent industry moves imply that our competitors are embarking upon a strategy we conceived a few years ago and have already executed, followed more recently by the globalization of our management, operating and technology organizations.
We know from experience the real costs and effort associated with integrating cultures, organizations, and platforms. These challenges, however, are some years behind us and we do not now see the need to undertake a major acquisition. On the contrary, we believe that our current global presence and capabilities position us to best serve our clients` business objectives.
Instead, we have been putting our focus on innovations that will transform the managed travel business model. Integral to this commitment is our ability to provide the world`s only fully integrated travel, purchasing and payment program that delivers quantifiable savings, service and control to our customers.
As part of American Express, Business Travel is also backed by one of the world`s most respected service brands. American Express remains committed to expanding its business travel capabilities over the long term.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
