Joint Venture to Benefit from Increased Investment in Digital Capabilities While Maintaining Key American Express Linkages
NEW YORK - Thursday, September 26th 2013 [ME NewsWire]
(BUSINESS
WIRE)-- American Express Company (NYSE: AXP) today announced plans to
create a joint venture designed to accelerate the transformation of its
Global Business Travel (GBT) division. American Express is in ongoing
discussions with regard to a proposed joint venture in which it would
share the ownership of the joint venture with an investor group led by
Certares, 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. The joint venture transaction is expected to create
greater investment capacity for GBT to further enhance its suite of
products and services, attract new customers and grow internationally to
deliver additional value to customers.
As presently
contemplated, American Express would maintain a 50% ownership stake in
the joint venture, which would continue to operate under the American
Express Global Business Travel brand, while an investor group led by
Certares would own the remaining 50% interest. The investor group would
invest a sum in the range of $700 million to $1 billion, 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
recognize a gain.
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. As the parties work toward completion of the transaction,
the GBT management team will remain in place and focused on serving the
needs of GBT’s business customers. American Express also expects to
execute comprehensive commercial agreements to provide uninterrupted
service and close coordination for mutual customers of GBT and American
Express’ other business units.
“We’ve been making strong progress
in our efforts to transform our corporate travel business,” said
Stephen J. Squeri, Group President, Global Corporate Services, 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. The joint venture we
plan to form represents the next phase of the transformation, which is
aimed at accelerating the growth of this business through additional
investments that would be used to develop new products, services and
capabilities that we expect will help us meet the evolving needs of our
current customers, attract new ones, and continue to build our
international business. We anticipate that the expansion of our business
travel offerings will not only help us grow GBT, but it would also
provide additional value to our corporate payments customers, which
would help us accelerate growth in that business as well. We believe
this structure will provide superior opportunities for delivering
customer benefits, retaining world-class talent and achieving long-term
success.”
Travel has been an integral part of American Express
for more than one hundred years, and maintaining a strong presence in
the business travel industry is of strategic value to the Company. GBT
has operations and network partners in 138 countries worldwide and
offers a comprehensive network, service dependability, and deep insight
to customers representing more than $19 billion in corporate travel
spend. The new joint venture would be positioned to utilize 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.
About American Express
American
Express is a global services company, providing customers with access
to products, insights and experiences that enrich lives and build
business success. Learn more at americanexpress.com and connect with us
on facebook.com/americanexpress, foursquare.com/americanexpress,
linkedin.com/companies/american-express, twitter.com/americanexpress,
and youtube.com/americanexpress.
Key links to products and
services: charge and credit cards, business credit cards, travel
services, gift cards, prepaid cards, merchant services, business travel,
and corporate card.
About American Express Global Business Travel
Positioned
at the intersection of commerce and travel, American Express Global
Business Travel offers its customers a comprehensive network, service
dependability, and deep insight to help move people and businesses
forward. American Express Global Business Travel provides leading travel
solutions, integrated consulting services, proprietary research, and
end-to-end meetings and events capabilities. These innovative offerings
enable customers to optimize the return on their travel and meetings
investments. Learn more at www.americanexpress.com/businesstravel.
American
Express Global Business Travel is part of one of the world’s largest
travel agency networks with locations in 138 countries worldwide.
Information Related To Forward-Looking Statements
This
release includes forward-looking statements that reflect management’s
expectations about future events and the Company’s operating plans and
performance. These forward-looking statements are subject to risks and
uncertainties. The words “believe,” “expect,” “anticipate,” “intend,”
“plan,” “will,” “may,” “should,” “could,” “would,” and similar
expressions are intended to identify forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date on which they are made.
American Express undertakes no obligation to update or revise any
forward-looking statements. Factors that could cause actual results to
differ materially from these forward-looking statements include, but are
not limited to, the following: events impacting the likelihood and
timing of the creation of the joint venture, execution of transaction
documentation and completion of the transaction, such as continued
negotiations, ongoing diligence, board and regulatory approvals and
consultation requirements; the ability of the potential investors to
fund their investment in the joint venture; uncertainty relating to the
timing and magnitude of the recognition of a gain by American Express as
a result of the transaction, such as the amount of the funds ultimately
raised by the joint venture and when assets are transferred to the
joint venture; the underlying assumptions related to the transaction
proving to be inaccurate or unrealized, such as the ability of the
transaction to accelerate the transformation and growth of the corporate
travel business and the ability to realize strategic linkages between
the business operations of the joint venture and American Express
following the transaction, including the acceleration of growth in the
corporate payments business; and the joint venture’s ability to
successfully create additional investment capacity and enhance the suite
of products and services available upon consummation of the
transaction. A further description of such factors can be found in
American Express’ Annual Report on Form 10-K for the year ended December
31, 2012, its Quarterly Reports on Form 10-Q for the three months ended
March 31 and June 30, 2013, and the Company’s other reports filed with
the SEC.
Contacts
American Express
Christine Elliott, 212-640-0622
christine.s.elliott@aexp.com
Diana Postemsky, 212-640-9203
diana.c.postemsky@aexp.com
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