Supplement | HBS Case Collection | April 2010

The Auction for Travelport (B)

by Andrei Hagiu and Misha Sanwal

Abstract

This short case presents the epilogue of The Auction for Travelport (A). Blackstone decided to bid on its own, acquired Travelport for $4.3 billion and subsequently went on to acquire another GDS, Travelspan, for $1.4 billion. It then merged the two GDSs and partially spun off in an IPO its online travel businesses, re-named Orbitz Worldwide; it retained the GDS and wholesale travel businesses. By the end of that year (2006), Blackstone had generated cost savings of $270 million. In 2007 Blackstone also undertook a major capital market transaction with Travelport, issuing a new $1.1 billion Senior Unsecured PIK Term Loan, which allowed Blackstone to take back all of its equity in the transaction. Subsequently, during the financial crisis of 2008 and 2009, Blackstone and Travelport repurchased the majority of the $1.1bn PIK loan and other debt in the open market at prices ranging from 18% to 57% of par value, generating a $610 million gain.

Keywords: Competitive Advantage; Value Creation; Private Equity; Mergers and Acquisitions; Industry Structures; Initial Public Offering; Capital Markets; Market Transactions; Change; Auctions; Travel Industry;

Citation:

Hagiu, Andrei, and Misha Sanwal. "The Auction for Travelport (B)." Harvard Business School Supplement 710-475, April 2010.