American Express Global Business Travel will acquire competitor
CWT in a transaction worth $540 million—a reduced valuation from the original
$570 million deal, after the U.S. Department of Justice on Tuesday dropped its antitrust
suit against the mega travel management companies.
DOJ in that lawsuit, put forth in early January in the
closing days of the Biden administration, alleged the combination of Amex GBT
and CWT—two of the three largest players in business travel management
services—would create an “oligopolistic” environment with too few other travel
management players able to scale services to global and multinational
companies.
DOJ on Tuesday, however, dismissed the suit, weeks before
its scheduled September start.
The Long Wait
The industry has been in wait-and-see mode since the merger
was announced
in March 2024. The U.K. Competition and Markets Authority was the first to
put the brakes on the merger in July
2024, citing an independent inquiry group that found the deal would lead to
less choice and higher prices among large customers, which the CMA defined as
having at least $25 million in annual total transaction volume. Amex GBT
publicly stated its disagreement with that assessment and pointed to what it
called the CMA’s failure to appreciate “the evidence that reflects the breadth
of the business travel industry and its dynamic and competitive nature.”
While the CMA continued its investigations, and delayed its
decision-making in January 2025, the Biden administration filed its own
objections to the merger on
Jan. 10. Amex GBT called the suit “politically
motivated” and erroneous with “stale, out-of-context statements that do not
reflect today’s competitive landscape.”
The increasing scrutiny caused Amex to push the projected merger
close
date to October 2025. It soon became clear, however, the wait could be considerably
longer. The DOJ refused a plea from the companies to expedite the suit to a May
trial date, even after the
TMCs invoked a “failing firm” defense for CWT in February, reinforcing the
case for the merger. The trial date at that point was set for September,
pushing Amex GBT and CWT to identify Dec.
31, 2025 as a “drop dead” date for the merger.
Synergies Expected
“We recognize the regulatory approval process has created
uncertainty for CWT customers and employees. We’re excited to close the
transaction and welcome them to Amex GBT. Together, we will offer customers
unrivalled choice, value, and experience,” said Amex GBT CEO Paul Abbott in a
statement.
“We are pleased that the DOJ has come to this conclusion,”
said CWT CEO Patrick Andersen in a statement. “Our customers and people have an
exciting future ahead of them as we turn our focus to completing the
transaction and integrating with Amex GBT.”
The companies expect the deal to generate approximately $155
million in identified net synergies across its operations in more than 140
countries. How those efficiencies might impact human resources was not addressed in the announcement, nor was the issue of what role Andersen will play as the integration of the two companies proceeds. A spokesperson for Amex GBT declined to clarify.
A number of CWT executives have departed the company already for roles elsewhere.
The purchase is made up of approximately 50 million shares
to be issued at a fixed price of $7.50 per share, with the remaining
consideration funded with cash on hand. CWT shareholders will own approximately
10 percent of the company.
How Will Buyers Respond?
Travel consultants BTN has engaged with in the past 12 weeks
have called out the industry’s “holding pattern” environment, as the merger of
giants remained in regulatory limbo.
Festive Road CEO Caroline Strachan posted on LinkedIn about
buyers who have said, “we’ve extended our contract” for a year or “we’re
waiting for all this to shake out.” Nevertheless, she predicted a surge in
demand for TMC requests for proposals awaiting the final outcome of the DOJ
decision. With that now settled, that surge can begin—and Strachan foresees
no-bids for buyers who have not already built relationships with their target
bidders. And she encouraged buyers to consider “wild-card” players that “might
be the perfect fit.”
Areka Consulting SVP of North America Charles Bacharach told
BTN that his firm already had seen the TMC RFP limbo begin to thaw, especially
considering the new TMC options that have become increasingly validated in the
months since Amex GBT and CWT originally announced their merger in March 2024.
“What we’ve seen in our business is a lot of the uncertainty
on the merger is causing them to go out to RFP,” Bacharach said on a BTN
Intelligence panel in May. “There’s a lot of CWT clients that either are
making the decision or have made the decision that they can’t wait for the
clarity on how all this is going to end up. And with that, they’re taking
matters in their own hands and putting a sourcing activity on the street.”