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.
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.
