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Lastminute.com bought by Travelocity

£577m acquisition creates largest online travel service company

In a move aimed at creating Europe's largest online travel service company, Sabre Holdings, the operator of Travelocity.com, is buying UK-based Lastminute.com for £577m.

Technically, the acquisition will be made by Travelocity Europe, an indirect subsidiary of Sabre Holdings that has been established for the purpose of executing the deal, the Texas travel reservations system operator said. Sabre expects to close the deal by the end of July, paying £1.65 a share for the London company, it said.

The deal fits into Sabre's overall strategy of extending its international reach as an e-commerce travel retailer. Sabre added it was interested in Lastminute.com, in part, for its high brand recognition, supplier relationships (currently around 13,600) and the size of its user base. Lastminute.com currently has over 9.8m subscribers to its weekly newsletter.

The acquisition of Lastminute.com will also aid Sabre's negotiating position with global airline and hotel companies, creating cheaper prices which it could then pass on to customers, the company has said.

Once the UK poster child of the Internet e-commerce boom of the late 1990s, Lastminute.com was launched in 1998 by Brent Hoberman and Martha Lane Fox. The site promoted last minute online offers for airline tickets, hotel rooms, package holidays, entertainment tickets, restaurant reservations and home delivery.

After its highly publicised and profitable initial public offering (IPO) in March 2000, Lastminute.com's business and stock price suffered when the internet bubble burst later in 2000. And after the terrorist attacks in New York and Washington, DC, in September 2001, people sharply cut back on travel.

But despite being blamed by analysts in numerous local media for undermining confidence in e-commerce companies in the UK and abroad, Lastminute.com pushed on, seeking to diversify and expand its business, in part with the purchase of 14 businesses in the past three years.

Hoberman will run the combined Lastminute and Travelocity business in Europe after the takeover, Sabre said. Fox left Lastminute.com in 2003, but she and Hoberman still jointly own over 7 percent of the company's stock.

The combined business has strong positions in the UK, France, Germany, Italy, Scandinavia and Spain, Sabre said. It added that Lastminute.com will be the lead brand in most cases, though Travelocity will evaluate its brands country-by-country after the deal is completed.

Sabre values Lastminute.com's business at £606m, including the company's debt of £69m and cash holdings of £40m, it said.

Lastminute.com has just announced its financial results for the six months ending March 31. It reported a net loss for the period of £45.5m, or £0.01339 a share, down from a loss of £39.5m, or £0.01332 a share in the same period last year. The company said it has never posted a net profit. Online bookings, or what Lastminute.com calls its total transaction value, rose 57 percent to £512.1m in the period, it said.

Lastminute.com's Chairman Brian Collie said that three companies, including Sabre, have recently expressed interest in buying Lastminute.com and that he couldn't rule out a counter-bid, though he believes the offer from Sabre is sound.


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