Sabre Rises in Debut After Smaller-Than-Planned IPOLeslie Picker
Sabre Corp., the travel software and data company that operates the Travelocity website, gained in its trading debut after raising less than it planned in its initial public offering.
The shares rose 3.1 percent to $16.50 at the close in New York, after being priced at $16 each yesterday. The company, which says its technology processed more than $100 billion of estimated travel spending last year, sold 39.2 million shares after offering 44.7 million for $18 to $20 apiece.
Sabre, which has posted annual losses for at least the past five years, is going public as increased competition has led to lower fees and as long-term debt has swelled to more than $3 billion. In an effort turn things around, Sabre entered an agreement in August with Expedia Inc. to process bookings through that platform instead of Travelocity’s, which will cut revenue from that unit while also trimming costs.
“I believe this is part of Sabre’s focus on becoming a more profitable organization,” Ron Josey, an analyst at JMP Group Inc., who has the equivalent of a hold rating on Expedia, said by phone before the offering. “Expedia is powering the bookings, and it gives them a lot more data.”
Travelocity’s sales accounted for 19 percent of total revenue, according to the prospectus. Sabre plans to use the proceeds from the IPO to repay debt and a give a fee to its sponsors.
The offering marks a return to the public markets by Sabre after TPG Capital and Silver Lake Management LLC acquired it for about $5 billion, including debt, in 2006. TPG and Silver Lake didn’t plan to offer shares in the IPO, according to the prospectus, and will hold stakes of 37 and 23 percent, respectively, following the IPO.
Sabre’s business segments include a travel network, which enables booking transactions between airlines and travel agencies, and software for the air and hospitality industry. The company’s revenue, largely generated through fees, climbed 2.5 percent to $3 billion last year, the filing shows.
The Bloomberg Americas Software Index -- which includes 50 members such as Salesforce.com Inc. and Oracle Corp. -- declined 4.2 percent through yesterday since a 14-year high on April 1.
The shares are listed on the Nasdaq Stock Market under the symbol SABR. Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp. and Deutsche Bank managed the offering.