A U.S. district court judge gave Sabre the green light to move forward with its acquisition of Farelogix, though its ability to follow through amid the Covid-19 crisis remains in question.
U.S. District Court for the District of Delaware Judge Leonard P. Stark on Tuesday issued a decision saying the U.S. Department of Justice failed to show the merger violated antitrust laws. He noted in the ruling that "Sabre, which is a two-sided platform facilitating transactions between airlines and travel agencies, does not compete with Farelogix, which indisputably only interacts with airlines and is not a two-sided platform."
In his conclusion, Stark said he actually had been more persuaded by the DOJ than Sabre's side, but he ultimately sided with Sabre because the DOJ failed to meet the burden of proof.
"Under our laws, and in our (regulated) market economy, private entities like Sabre and Farelogix are generally free to enter into agreements and relationships with one another, whether or not the government prefers that they do so," according to Stark. "If DOJ is to get the court to enjoin such a transaction, it must meet its burden of proof. Here, the government has not done so."
In a brief statement following the ruling, Sabre VP of communications Kristin Hays said the ruling "supports our view that the Sabre-Farelogix acquisition is not anti-competitive. We appreciate the consideration the court gave to these important issues."
Sabre also is awaiting a final decision from the U.K. Competition and Markets Authority, which earlier this year said it intends to block the merger, according to Hays. Sabre expects to receive that decision later this week.
The Covid-19 outbreak, however, has broadened Sabre's challenges with the acquisition beyond the regulatory. The deal comes with a $360 million price tag in a time that the global travel industry is paused. According to analysis published by BTN sister publication The Beat, Sabre had $436 million in cash on its balance sheet at the end of last year and has withdrawn an additional $375 million in credit, not counting what additional aid that could come from a federal relief package. Even so, with travel industry recovery from the coronavirus outbreak projected to take years, the cost to acquire Farelogix might be too steep at the moment.
It will come with a cost either way, as Sabre faces up to $25 million in break-up fees should the acquisition not go through by its April 30 deadline.