NEW YORK -- Sabre Holdings Corp. agreed to buy a majority stake in
Preview
Travel and said it will merge Preview with it's own on-line
division, Travelocity.com.
The move will create the world's largest on-line travel agency
and one of the 10 largest agencies in the U.S.
The new company, Travelocity.com Inc. will become a powerhouse
in the on-line and traditional agency community, with a combined 17
million registered subscribers and estimated annual travel sales of
more than $1 billion.
The new company will be the third-largest electronic commerce
site in the country, just behind eBay and Amazon.com.
"The combination will create a clear category leader in online
travel services," Don Carty, chairman of Sabre said during a press
conference here.
The next largest on-line agency is Microsoft's Expedia.com,
which announced plans late last month with federal regulators for
an initial public offering of stock.
In a clear sign of its potential, America Online signed a new
$200 million agreement that makes Travelocity.com the exclusive
on-line travel provider to AOL subscribers for the next five
years.
Travelocity will pay AOL $200 million over time as various
advertising hurdles are reached. However, Travelocity will receive
a share of all travel channel and travel supplier advertising.
Under terms of the deal, Sabre will retain a 70% stake in the
Fort Worth, Texas-based Travelocity.com, which will begin trading
on the NASDAQ market after the scheduled close of the transaction
in the first quarter 2000.
Preview Travel will retain 30% of the new company. The new
company will have 47 million preferred and common shares
outstanding.
Yahoo has also agreed to buy a minority stake in the new
company. Terms were not disclosed.
Terrell B. Jones, president of Travelocity.com, will be
president and chief executive of the new company.
Donald Carty will serve as chairman of the new company until a
new chief executive officer of Sabre is named.
James Hornthal, founder and chairman of Preview Travel, will
serve as vice chairman of the new company.
Sabre will contribute $50 million in cash to the new company,
formed as a Delaware-based limited partnership.
The money will go toward funding operations. The new company
will have an option to call for another $50 million from Sabre.