Sabre's agreement to acquire GetThere Inc. for $757 million in cash
strikes us as a remarkable proposition.
It's not Sabre's first acquisition by any means, nor is it the
first time that a travel technology company has decided to shell
out a huge sum for something that ends in dot-com. But the more we
look at this deal, the more trouble we have coming to grips with
the implications of these remarkable numbers.
We've no doubt that GetThere is a fine company, but the sad fact
of its short history is that, like many e-commerce firms, it is not
profitable. During its last fiscal year, it reported total revenue
of $15.4 million and an operating loss of $49.2 million. By
Internet standards, that's not remarkable.
GetThere's stock price has slipped steadily this year from a
January high of about $52 per share and was hovering around $12 the
day before the news broke about Sabre. Also not remarkable.
Sabre intends to merge GetThere with its Sabre Business Travel
Solutions unit. The combined entity would operate under the
GetThere name and generate revenue of about $50 million this
To sum up: Sabre, with annual revenue approaching $3 billion,
will spend $757 million to acquire an unprofitable company whose
stock price has lost 75% of its value in the last eight months,
thereby increasing Sabre's annual revenue by about $20 million or
Clearly, Sabre is buying something other than the opportunity to
increase its revenue by a mere $20 million or so. Sabre calls it a
strategic investment, which means Sabre believes it is buying a
piece of the future of e-travel. And so it is.
The deal didn't create a big buzz on Wall Street. The few
analysts who commented on the deal said it makes sense. Remarkably,
nobody said "gee whiz" at the $757 million part, which raises a
question that we can't answer: What do you have to do to earn a
"gee whiz" around here these days?