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.