Capturing Spread"The arbitragers are saying the price of the deal is going to increase," said Bailey Dalton, an analyst at C.E. Unterberg, Towbin. "Typically, the price of an offer does go up 15% to 20% in these situations." According to Dalton, Travelocity's top shareholders, across the board, believe the price is too low. Other analysts agree: "I think $23 is too cheap," said Paul Keung, an analyst at CIBC World Markets. "My price target is $30. Something closer to that price would be more reasonable." Sabre Holdings said it would make the tender offer on or soon after March 5. The travel holding company estimates that the proposed transaction would be neutral to its 2002 earnings.
Building BusinessSabre Holdings is trying to create a travel conglomerate, much like what USA Networks ( USAI) -- which owns a controlling stake of Expedia ( EXPE) and Hotel Reservations Newtork ( ROOM) -- has done. "It's more effective to negotiate with suppliers across multiple distribution channels," Keung said.
|Traveler's Check |