Just got off a Skype call with Greg Webb, president of Sabre Travel Network, and Robert Bailey, president and CEO of Abacus International, about an hour after the two consummated the deal in which Sabre will buy Abacus outright.
Greg Webb (left) and Robert Bailey – consummating the deal
Both men sounded visibly excited and thrilled, jesting they’d just finished hugging each other – and they should be. It’s been called the world’s worst-kept secret – the fact that the two parties have been talking for ages on the deal – and I suppose it’s understandable why it’s taken so long.
Getting Abacus’ 11 shareholder airlines to agree to sell is one thing, getting agreement on the right deal that would please everyone is another.
Under the agreement, Sabre Corporation will buy the remaining 65% stake in Abacus from its shareholder airlines for a net cash consideration of $411 million. Subject to regulatory approvals and other closing conditions, the transaction is expected to close in the third quarter of 2015.
It seems a natural evolution of the partnership – Sabre has had a 35% stake in Abacus for some time and a lot of its technology already powers the Asia/Pacific GDS – and it was really only a matter of time when it would leverage its position to take advantage of the largest and fastest growing travel market in the world.
Said Webb, “From a Sabre and personal perspective – I’ve been on the Abacus board for more than decade – I could not be more excited. The strength of Abacus, the things they’ve done in the last five-six years to grow their business – I could not be more thrilled.
“We’ve always seen Abacus as part of the same family – this is just formalising the arrangement.”
Bailey, who’s headed Abacus for the past seven years, added, “This is an amazing development, we’re very excited to get across the line. Business is good at Abacus and the access to Sabre technology will give us that extra oomph.”
Asked what the biggest obstacle was in getting the deal done, Webb said, “The asset is performing very well, Abacus has done a good job of driving performance. The future is about getting us more aligned on a path which allows us to innovate and invest heavily in the region.
“The question we asked was, how can we make this the most effective asset and if we could have an ongoing commitment from the carriers that would give us the ability to run Abacus on a global level.”
The acquisition includes new long-term distribution agreements between Sabre and the 11 airline owners of Abacus.
With the deal freshly signed, questions abound as to what will happen to Abacus management and operations, as well as whether the Abacus brand will be kept. There are as yet no answers while the deal moves towards finalization at year end. For now, the official line is “business as usual”.
“We are currently in limbo land as to the future operations of the business. Obviously Abacus is a strong brand in the region and that’s not to be taken lightly,” said Webb.
Asked if this would mean the “Americanisation of Abacus” or the “Asianisation of Sabre”, Webb said, “Definitely the latter. If we went back 15 years ago, I would have said, we were an American company that happened to do business in Asia. Today, we are a global company that happens to be in America.
“We absolutely want to take advantage of regional knowledge and strength and not do anything to disrupt the Abacus business.”
Bailey said the growth opportunities were the rapid growth in the online travel space as well as in the expansion of regional and global agency groups. “I see this as key opportunities for us and this transaction will strengthen our business.”
Observers see the move as a defensive one, saying that Amadeus has been gaining market share in Asia Pacific in both the GDS business as well as airline hosting. “When Abacus was created, Amadeus did not have a hosting solution. Now up to nine of the 11 airline shareholders of Abacus will be hosted on Amadeus,” said one analyst. “So you could argue that the airlines do not need Abacus as much as they used to.”
One could also see it as offensive – if Sabre follows up on its promise to invest heavily in the region. The critical question is how much of an appetite will Sabre have and will it allow the Abacus team to execute autonomously without over-bearing corporate interference?
Said Webb in the press release, “Abacus currently provides a broad set of services to its customers using a base of Sabre technology for the large majority of core functions to market, distribute, sell and service travel in the Asia-Pacific region.
“That, along with deep local market capabilities, will result in a smooth transition for Asia-Pacific customers, who should see the benefits of global capabilities while continuing to use our familiar, leading technology.”
Abacus will operate as a region of Sabre Travel Network, and Sabre expects its expanded Asia-Pacific direct presence will benefit Sabre Airline Solutions and Sabre Hospitality Solutions. Sabre also will continue its partnership to provide technology services to INFINI, a local Japanese GDS.
And so begins a new era in Asian travel.
