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Sabre's Bid for Travelocity Turns Hostile

Despite a statement from Travelocity.com Inc. that a tender offer from travel company Sabre Holdings Corp. at $23 a share is inadequate, the Fort Worth, Texas-based company went ahead with its offer for all of the outstanding shares that it doesn't already own.

Sabre announced the unsolicited offer on Feb. 19. The problem is, the market has valued Travelocity stock significantly higher than the offer. It closed Monday at $26.60 and in mid-morning trading today it was going for $26.22.

Travelocity said that the move by Sabre is "an opportunistic attempt to acquire Travelocity at a time when its stock price is temporarily depressed..." Travelocity also said it has been hit with 11 separate shareholder lawsuits to block the tender offer by Sabre.

Sabre said in a statement today that it is "offering $23 per share to acquire the balance of Travelocity.com common stock (approximately 15 million shares), representing a 19.8 percent premium over the closing price of $19.20 on Feb. 15, the last trading day before Sabre announced its intention to begin a tender offer.

But Travelocity said in a statement Monday that a special committee of the board of directors (comprised of independent, outside directors) determined that the offer at $23 a share "would be inadequate." The special committee was advised by Salomon Smith Barney.

Travelocity said it would advise stockholders of Travelocity's position with respect to the offer no later than 10 business days after commencement.

Sabre, a B2B technology, distribution and travel marketing services company, has said it plans to combine the strengths of both companies "to pursue new revenue opportunities, while optimizing investment decisions." Travelocity would become a wholly owned Sabre company. Sabre said it does not plan to change Travelocity's executive team, strategic direction or brand.

Sabre said today its offer is conditioned on the tender of a number of shares sufficient to bring Sabre's ownership interest in Travelocity common stock to at least 90 percent.

Following completion of the tender offer, Sabre intends to consummate a "short-form" merger in which the remaining Travelocity stockholders would receive the same cash price paid in the tender offer.

Travelocity, also based in Fort Worth, posted pro forma income of 9 cents per share for its fourth quarter on gross travel bookings of $630.2 million.