Navigant International today said it paid about $775,000 in cash, a $19.5 million short-term promissory note and $10.4 million in Navigant common stock to buy Northwestern Travel Service LP from Northwestern Travel Service Inc. and the Noble Family Limited Partnership. Northwestern ranked sixth in
Business Travel News' listing of the largest U.S. corporate agencies, based on verified 2003 ARC transaction counts
(BTN, May 24).
BTN did not receive authorized data on American Express and Navigant, but their claims would rank them first and second, respectively.
According to Navigant, Northwestern in 2003 sold $335 million in airline tickets, incentives and meetings, generating revenue of about $40 million and earnings before interest, taxes, depreciation and amortization of about $6.5 million. Navigant said 70 percent of Northwestern's revenue was derived from corporate travel management, 13 percent from meetings and incentives and 17 percent from leisure travel.
"Subject to contingencies, if Northwestern Travel achieves certain revenue objectives by the first anniversary of the closing, the sellers will be entitled to up to approximately $10.2 million in additional cash consideration," Navigant said. Navigant CFO and COO Bob Griffith today told
BTN that the additional consideration relates to Northwestern maintaining revenues, driven in part by client retention. He said Northwestern and its management would be merged into Navigant's North Central region, headed by region president Kelly Kuhn.
Griffith was unable to comment on whether Northwestern would remain a member of the Radius consortium, though he said existing contracts would be honored.
One hundred percent of Northwestern's global distribution system bookings in 2003 were processed through the Worldspan GDS, and Griffith did not expect that to change, despite Navigant's equivalent figure of 10 percent on Worldspan. "We use all four GDSs and, Minneapolis being a Worldspan market, we would generally leave that that way," he said. Northwestern is one of Worldspan's five largest traditional agency subscribers.
Regarding other systems, Griffith said Northwestern already uses of tools from Navigant division Aqua Software Products, and that it likely would convert to Navigant's data consolidation and reporting software. The companies said Northwestern clients also would be invited to use Navigant's new Passportal suite
(BTNonline, June 15).
Navigant said the acquisition would "be immediately accretive to our results in the second half of this year and our finance and integration teams believe they have identified several areas where cost savings can be realized." As a result of this deal, improving corporate-travel trends and a meetings-related acquisition revealed earlier this year,
(Meetings Today, June 7), Navigant raised its guidance for 2004 EBITDA to $60 million from $57.3 million.
"We are increasing our financial guidance for the second half of 2004," Griffith said, "but at this time we are solely presenting increased guidance based on the combination of the two entities and before any vendor contract, operational and cost saving synergies."