WORLD – American Express has signed a joint venture with an investor group led by Certares to accelerate the transformation of its Global Business Travel (GBT) division. Certares is a firm headed by senior management with significant experience in the travel industry.
It is expected that GBT’s operations, business relationships and other assets would be held and operated by the joint venture entity.
American Express would maintain a 50 per cent ownership stake in the joint venture, which would continue to operate under the American Express Global Business Travel brand, while an investor group would own the remaining 50 per cent interest. The investor group would invest a sum in the range of $700m to $1bn, which would be used by the joint venture to grow the GBT business.
Subject to the execution of definitive agreements and receipt of requisite regulatory and other approvals, the transaction would be expected to close in the second quarter of 2014, at which time American Express would expect to recognise a gain.
The joint venture transaction is expected to create greater investment capacity for GBT to enhance its suite of products and services, attract new customers and grow internationally to deliver additional value to customers.
It is also anticipated that GBT employees would transition to the new structure which, upon closing, would be managed by a board of directors that would include representatives appointed by American Express and the investor group, as well as selected independent directors.
“We’ve been making strong progress in our efforts to transform our corporate travel business,” says Stephen J. Squeri, Group President of Global Corporate Services at American Express. “The first phase of this transformation, announced earlier this year, has been focused on reducing the cost structure within GBT through our technology and infrastructure advances.”
GBT has operations and network partners in 138 countries worldwide and its customers representing more than $19bn in corporate travel spend.
The new joint venture would be positioned to use its own funds to invest in the business while still maintaining and benefitting from the customer benefits of a link to American Express’ other business units, such as Global Corporate Payments, which issues the American Express Corporate Card and provides business-to-business payment solutions.
American Express’ consumer travel business, which provides Card Members and other consumers with travel benefits and services, would not be part of the proposed transaction.
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