Executives at American Express Global Business Travel said Monday that its acquisition of rival CWT for $570 million would deliver significant shareholder value, add 4,000 new customers and generate immediate synergies.
If approved, the merger would be one of largest by travel management companies in recent history: in 2018, Amex GBT acquired Hogg Robinson Group. Amex GBT expects the transaction to close in the second half of 2024.
During an investor call, Amex GBT CEO Paul Abbott said the company had identified approximately $155 million in annual synergies within the first three years.
"Our proven track record gives us confidence in achieving this goal," he said, adding that Amex GBT expects the transaction to be "highly accretive," breaking even in year one and being accretive thereafter.
Amex GBT CFO Karen Williams added that the acquisition is "an incredible synergies story," with that $155 million being mostly realized by consolidating the cost base of CWT and Amex GBT. Approximately 80% of that synergy target is related to improved efficiency from consolidation, she said, while the remainder is expected from vendor optimization.
"Importantly, we expect AI and automation to be a significant opportunity for us," Williams said. "CWT is very aligned with this focus, and has several generative AI use cases within its CWT platform, highlighting the incredible leverage we have for margin expansion in the future."
An American Express GBT chart displaying the expected synergies gained from the CWT acquisition.
Abbott said the deal is part of Amex GBT's focus on mergers and acquisition (M&A). Abbott called the industry "large and fragmented" with significant M&A opportunities.
"Our agreement with CWT clearly shows that we are executing against this attractive opportunity and delivering on our M&A priorities," Abbott said, adding that Amex GBT's first M&A priority is "to drive growth. This acquisition will immediately grow our revenues by one-third with the potential for even greater earnings growth over time."
CWT will add a diverse set of customers in terms of industry, geography and size, Abbott said, noting that the company has a "strong presence in high-value segments including energy, resources, marine, media, entertainment and sports, life sciences and defense and government."
Abbott said clients will benefit from the deal.
"Creating more value for customers is really at the center of the transaction here" he said. "And that comes in a range of different forms, such as more choice, including access to the combined proprietary software solutions and combined professional services.
And, by saving customers money.
"We do that by giving them access to the most comprehensive and the most competitive content and creating the most valuable marketplace in travel," Abbott said. "And certainly that will be a big benefit to CWT customers to have access to our marketplace and to get access to the best and most comprehensive content in the industry."