FORT WORTH, Texas -- Sabre Holdings Corp. agreed to acquire
GetThere Inc. for $757 million in cash.
The two companies said the acquisition would bring together "the
top two players in the on-line business-to-business corporate
travel channel and the business-to-consumer e-commerce
channel."
When the deal is completed, the two companies will be combined
to create one on-line, business-to-business booking tool under the
GetThere name.
Gadi Maier, GetThere's chairman, president and chief executive
officer, will be president of the combined organization. He will
report to William Hannigan, chairman, president and chief executive
officer of Sabre.
GetThere chief operating officer Ken Pelowski said his experts
anticipate a closing in about two months.
Scott Smith, senior vice president and general manager for Sabre
BTS, said, "When we finish [the integration], there will be one
suite of products that will be offered to customers of both
companies."
Smith said GetThere will retain headquarters in Menlo Park,
Calif., and that Sabre will retain the GetThere name in marketing
the new on-line travel product.
"GetThere will be marketed as a Sabre company, but as a separate
division or subsidiary," said Smith. "We want to take the best of
each product to create the final product."
Smith said GetThere's "CRS independence" was attractive to
Sabre. GetThere's technology can be connected to any of the four
CRSs.
"As proud as we are of Sabre's marketplace, that leaves a whole
bunch of global customers that use different CRSs around the
world," said Smith, who estimated that 50% of worldwide travel
bookings are conducted through Sabre.
He also said Sabre was intrigued by GetThere's business model,
in which suppliers are directly connected with corporate travel
buyers.
Distribution costs are significantly lowered for suppliers in
this model, because the intermediary -- the CRS -- is bypassed.
Travel booked through Sabre BTS is routed through Sabre's CRS.
Smith indicated that the new solution will be a hybrid model,
giving customers a choice between direct connectivity and CRS
usage.
Smith said customers looking for optimum savings and "bare-boned
services" might opt for direct connectivity. Customers that need "a
myriad of distribution services" like "one-stop shopping and PNR
storage" might choose the CRS model.
Even though GetThere was a competitor of Sabre BTS before the
acquisition, the purchase wasn't spurred by a desire to eliminate
competition, said Pelowski.
Richard Eastman, chief executive officer of the Eastman Group --
a company that develops software for the travel industry,
disagrees.
"Sabre has been on a quest to control all of the e-distribution
channels for all travel product vendors," said Eastman. "They are
doing everything they can to achieve that strategic objective, and
they are doing it well."
Eastman said the $757 million price tag is steep, but consistent
with what Internet companies are demanding.
Indeed, by conventional standards, the price is a high multiple.
For its latest fiscal year, GetThere.com reported a net loss of
$49.2 million on total revenue of $15.4 million.
But Eastman said Sabre's strategic objective makes it willing to
pay that price, not necessarily because GetThere possesses
technology that Sabre wants or needs.
"I don't think GetThere technology in and of itself is worth
that money," Eastman said.
Also, because GetThere has helped implement on-line technology
for consumer sites of airlines including United, All Nippon Airways
and TWA, Sabre will have access to markets that were closed to
Sabre previously, said Eastman.
Up until earlier this year, American's parent owned a part of
Sabre, so access to those markets was previously limited or
impossible.