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The Deal: American Express to Sell $2B Stake in Travel Business

NEW YORK ( The Deal) -- American Express (AXP - Get Report) said Wednesday it was in talks to sell a 50% stake in its business travel unit to Certares International Bank in a deal that would value the unit at upward of $2 billion.

New York-based American Express said that it is in discussions about New York-based Certares injecting between $700 million and $1 billion into American Express Global Travel in return for a 50% stake. American Express would maintain a 50% stake in the venture under the terms of the deal, which is subject to a definitive agreement and receipt of regulatory approvals.

Amex said it expects the deal to close in the second quarter of 2014, at which time the company expects to recognize a gain.

The announcement follows attempts by American Express to revamp the business, which has come under pressure from cheaper, online methods for booking corporate travel. The company in January slashed 5,400 jobs, including a large number of workers in its travel business, and said it was looking to develop tools to allow it to better compete with online travel agencies.

Stephen J. Squeri, group president of Amex global corporate services, in a statement said the talks with Certares are the next step in reshaping the travel unit.

"We've been making strong progress in our efforts to transform our corporate travel business," Squeri said. Certares' funds will be used to develop new products and services that the executive said are necessary to build the travel group's U.S. and international customer base.

Global Travel has operations in 138 countries and generated commissions of $1.94 billion in 2012.

"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," Squeri said. "We believe this structure will provide superior opportunities for delivering customer benefits, retaining world-class talent and achieving long-term success."

Certares is led by Michael Gregory O'Hara, the one-time chief investment officer of J.P. Morgan Chase's (JPM) special investments group and former managing director with the bank's One Equity Partners private equity arm. He is also a former director at travel reservation system Worldspan.

O'Hara is also co-chairman of the board at Travel Leaders Group, a travel agency consolidator.

Written by Lou Whiteman

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