American Express’s (NYSE:AXP) Global Business Travel Group (NYSE:GBTG) announced the acquisition of CWT for $570 million on a cash-free, debt-free basis. This transaction will involve both cash and stock, with an issuance of 71.7 million shares by Amex GBT at $6.00 each, utilizing available cash to retire CWT debt. Furthermore, as a component of this agreement, CWT shareholders, primarily investment funds, will encounter a 90-day lockup for half of their shares and a 270-day lockup for the remainder.
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The acquisition is expected to close in the second half of this year.
AmexGBT offers booking and management services for corporate travel. Meanwhile, CWT, recognized as a global provider of business travel and meetings solutions catering to 4,000 customers, is projected to yield approximately $850 million in revenues. Additionally, it is forecasted to generate an adjusted EBITDA ranging between $70 million to $80 million for 2024.
With reference to CWT’s adjusted EBITDA for FY24, this transaction is projected to produce a pre-synergy multiple of 7.6x and a post-synergy multiple of 2.5x on its adjusted EBITDA. AmexGBT envisions annual synergies of $155 million arising from the acquisition, with an anticipated realization of 35% of these synergies in 2025.
Moreover, the acquisition is anticipated to yield positive impacts (accretive) and could potentially achieve break-even to earnings per share (EPS) within the initial year post-deal closure.
Is AXP a Buy, Sell, or Hold?
Analysts remain sidelined about AXP stock with a Hold consensus rating based on eight Buys, 10 Holds, and three Sells. Over the past year, AXP stock has surged by more than 35% and the average AXP price target of $209.63 implies a downside potential of 7.4% at current levels.
