American Express to Spin Off Global Business Travel in Joint Venture
American Express intends to sell off half its stake in its Global Business Travel division and run that division as part of a joint venture with outside investors, the company announced yesterday. The proposal entails sharing ownership of the division with a group led by Certares, a firm founded by travel industry veteran M. Gregory O'Hara. American Express and Certares would each own 50 percent of the venture, which would continue to operate under the American Express Global Business Travel Brand. According to terms still being discussed, Certares and its investors would pay $700 million to $1 billion to grow the business. American Express expects the transaction to close in the second quarter of 2014, subject to agreements and approvals. At that time, Amex anticipates that employees of Global Business Travel - including those who work for American Express Meetings & Events - would transition to the new entity, to be managed by a board of directors that would include representatives from Amex, the investor group and some independent selections. The new venture still would be integrated with other divisions of Amex, according to the company, including Global Corporate Payments. The consumer travel division would not be part of the joint venture.
According to statements from Stephen J. Squeri, American Express group president of Global Corporate Services, the joint venture represents the second phase of the company's corporate travel business transformation. The first phase, announced in January (read about it here [http://www.meetings-conventions.com/News/Business-Travel/Amex-to-Eliminate-5,400-Jobs/]), involved restructuring the division and eliminating 5,400 jobs, or about 8.5 percent of the company's work force. This next phase, according to Squeri, "is aimed at accelerating the growth of this business through additional investments that would be used to develop new products, services and capabilities that we expect will help us meet the evolving needs of our current customers, attract new ones and continue to build our international business."
In addition to serving as chairman and CEO of Certares, M. Gregory O'Hara is co-chairman of the board of directors of Travel Leaders Group. He previously served on the boards of Carlson Wagonlit Travel, Travelport, Worldspan Technologies, Rearden Commerce and TV Guide Network.