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American Express' (AXP) GBT to Go Public at a Valuation of $5.3B

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American Express Company’s (AXP - Free Report) joint venture American Express Global Business Travel (“GBT”) recently announced that it will go public through a merger deal with a blank-check company supported by Apollo Strategic Growth Capital. The deal is expected to value the merged entity at a pro-forma market capitalization of $5.3 billion.

In 2014, American Express spun off GBT into a joint venture by selling a 50% stake to a consortium led by investment management firm Certares LP. Following the latest merger deal, GBT will be renamed as Global Business Travel Group, Inc. and listed on the New York Stock Exchange under the ticker “GBTG”. The deal is expected to close in the first half of next year. It is expected to continue operations under the GBT brand name.

The move is likely to rake in gross proceeds of $1.2 billion, including $335 million through private investment in public equity (PIPE), which will comprise players like Zoom Video Communications, Inc. (ZM - Free Report) , travel technology company Sabre Corporation (SABR - Free Report) , asset manager Apollo, Ares Management, and investment adviser HG Vora. The deal will enable these major players to join the existing stake owners American Express, online booking company Expedia Group, Inc. (EXPE - Free Report) and Certares.

Last month, Expedia's digital travel management platform Egencia was acquired by GBT. Expedia became a shareholder in Global Business Travel as part of the transaction.

GBT’s decision to go public comes at an opportune moment when business travels are witnessing a gradual recovery from coronavirus-induced demand destruction. Roping in major investors like Zoom, Sabre and others further highlights the GBT business’ growth potential. With the ongoing economic recovery and ease of travel restrictions, the corporate travel juggernaut is expected to witness massive growth in sales. Becoming a public company will provide the company with additional investment capacity. 

Collaborating with Zoom will likely help GBT to leverage Zoom Events solutions to boost its hybrid meeting services around the world. The partnership will likely provide cost-effective corporate meeting solutions to clients.

Also, strategic investments from global travel technology firm Sabre will likely enable GBT to provide clients with more choices while boosting the quality of services. SABR is expected to help GBT develop technologies to boost corporate travel distribution and enrich the corporate travel ecosystem. As such, bookings through Sabre are expected to witness a major uptick.

Price Performance and Zacks Rank

American Express’ shares have increased 25.9% in the past year compared with the 14.9% rise of the industry. It currently has a Zacks Rank #3 (Hold).

Zacks Investment ResearchImage Source: Zacks Investment Research

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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