Acquired travel companies

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sam

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May 30, 2006, 10:15:54 PM5/30/06
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It seems that a lot of little travel companies are being bought by big
giants.
I know recently IAC acquired Tripadvisor and sometime last year Sabre
Holdings acquired IgoUgo.
I posted a couple of weeks ago asking about any details on the
Tripadvisor deal and the answer was really fascinating. Any ideas about
how IgoUgo was evaluated and how much it was acquired for?
I am wondering what is the difference between the 2 acquisitions.

Thanks
Sam


n...@iname.com

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Jun 2, 2006, 11:40:23 AM6/2/06
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sam wrote:
>
> It seems that a lot of little travel companies are being bought
> by big giants.

This is called "consolidation". Usually happens whenever an industry
matures...

> I know recently IAC acquired Tripadvisor and sometime last
> year Sabre Holdings acquired IgoUgo.
> I posted a couple of weeks ago asking about any details on
> the Tripadvisor deal and the answer was really fascinating.
> Any ideas about how IgoUgo was evaluated and how much
> it was acquired for?

First of all, make it a habit to research SEC filings whenever you have
a question concerning finances of a publicly traded company. If it's
anywhere, it's in the company's annual report (form 10-K).

In this case, however, this approach doesn't quite work; Sabre's 2005
10-K lists two acquisitions in 2005, SynXis ($41 million) and
lastminute.com ($1.2 billion). This probably means that whatever Sabre
paid for IgoUgo was immaterial (accounting word for "too small to
mention"). Sabre's 2005 10-K also lists acquisitions made in 2004 and
2003; the smallest acquisition mentioned, that of Sweden-based RM
Rocade in 2004, is $15 million. So my guess would be that IgoUgo was
acquired for significantly less than $10 million.

Jim Donnelly and Tony Cheng, IgoUgo founders, had this to say on the
subject:

...over the past few years we've tossed around many
big ideas for IgoUgo but lacked the resources to
implement them. With the financial backing of Sabre,
however, IgoUgo.com promises to grow into the site
we've always known it could be. This acquisition affords
us not only access to Sabre's extensive distribution
channels and content sources, but also the funds to
pursue longtime goals like faster site performance and
the development of new kinds of content.

http://www.igougo.com/about/sabreAquisition.asp

Note that site performance is cited a problem that couldn't be solved
by any means other than acquisition by Sabre, which probably means that
prior to the acquisition IgoUgo was growing out of its existing
Internet infrastructure, but couldn't afford an uprgade... Not a good
position to be in when negotiating a sale, and another sign of
relatively low purchase price...

Second, valuation of a growing company is a complicated exercise.
Structuring an aquisition is even more complicated. Very few people
will tell you any details, especially since pre-acquisition discussions
are usually covered by confidentiality agreements.

> I am wondering what is the difference between the 2 acquisitions.

One happened on a day it was sunny in London, the other, on a day it
rained in Tokyo. What exactly is your question?

Cheers,
NC


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