<B> Amex Acquires Havas</B>
By Sarah Welt
<I>New York</I> - In the latest in a series of acquisitions and joint ventures in the European market, American Express announced last week that it will acquire the $2.5 billion Havas Voyages SA, its French joint-venture partner for the past two years.
The acquisition is expected not only to bolster Amex's position in Europe, but also to further its technology and card businesses in both corporate and leisure markets.
Under the deal, Amex will buy out all of Havas Voyages' corporate business, estimated to amount to about 30 percent of the French corporate market, as well as its retail and incentive travel divisions, plus Via Voyages, an independent travel agency that Havas Voyages purchased last year.
Harold Seligman, CEO of Management Alternatives of Stamford, Conn., said Havas' transition from a joint venture to a wholly owned subsidiary of American Express "should be transparent" to corporate customers "unless they try to go in and renegotiate contracts that Havas has put in with major clients."
While American Express might have different corporate contract guidelines than Havas did, it is not likely to make aggressive changes in existing Havas contracts with corporate customers, assuming it follows the model it set up when it acquired Thomas Cook Travel, Seligman said.
"Amex could make available expanded services to Havas," Seligman said, but "I suspect things will be status quo."
The travel agency acquisition follows several global travel acquisitions and joint ventures Amex has made over the past five years, in the United Kingdom, Germany, Sweden, Australia and the United States, Petruccelli said. Its most recent was in April, when it formed a joint venture with BBL Bank in Belgium (<I>BTN</I>, April 13).
Amex had not expected to end up buying Havas Voyages when it began its joint venture in 1996, but "Havas defined a different strategy," according to Amex International Travel Services Group president Charles Petruccelli.
Havas Voyages' parent, The Havas Group of Paris, decided that the travel business required "support, expertise and an investment that was not part of its core activities," then studied a series of options and finally asked Amex "if we were interested in acquiring a major part of the business, or the totality of the business," Petruccelli said.
Since the joint venture had "exceeded all objectives" and Amex has developed a strong relationship with Havas management, "it was a natural option for them to propose to us, and a natural option for us to look into it," Petruccelli said.
In addition to acquiring Havas' travel operations, Petruccelli said he sees this as an opportunity to bring other Amex products--most notably the corporate card and the AXI online booking system it has developed with Microsoft--to the French market. The ultimate goal is to get 100 percent of corporate customers onto the American Express card and to roll out AXI to the French market after a broader international rollout that will include Canada, the United Kingdom, Germany and Sweden by the end of this year.
Organizationally, Petruccelli said, "the company is well run, with stable management," so Amex does not plan to change anything at this stage. Christophe Charpentier, chairman and CEO of Havas Voyages, will continue to lead the company.
Moving forward, American Express will bring the French market "our best practices that we have developed in other markets, accelerate the reengineering of processes for reduction of cost for customers and bring our technology investment," Petruccelli said.
He credited Havas, meanwhile, with bringing to the table an existing portfolio of corporate customers, expertise in the French market, a "savvy approach to customer satisfaction" and management talent.
Under the terms of the acquisition, the French operation will continue to have the rights to use the name of the former joint venture, Havas Voyages American Express, for six years. "The name is strong and well recognized in France," Petruccelli said. The extended time frame will give Amex "time to develop an appropriate transition to communicate properly with customers and with the community in general."
In a published statement regarding the acquisition, Havas chairman and chief executive officer Eric Licoys said the group has been "delighted with our joint venture and is now very pleased that American Express will be investing in the Havas Voyages business. This deal has the support of the Havas Voyages management."
In related news, American Express announced recently that it has signed a franchise agreement with Otto-Versand, a German travel agency network. The German franchise deal is primarily for the leisure side of the business, where Otto-Versand will run and operate 25 American Express locations as well as rebrand its own network of 23 offices as Amex offices.
Amex and Havas also have recently launched a co-branded consumer card providing a loyalty program to Havas leisure customers, where Havas commands 20 to 25 percent of the French market. While Petruccelli said it was too early to comment on its plans to increase that market share, he said Amex "certainly wants to capitalize on its very favorable position.