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Morningstar | Travelport on Track to Go Private Later This Year; 1Q Results Weaker Than Peers Sabre and Amadeus

Narrow-moat Travelport continues to expect to go private in the first half of 2019, after its December 2018 announced takeout by asset managers Siris and Evergreen for $15.75 per share. Shareholders approved the deal in March, and the parties are just awaiting consent from Russian regulatory bodies. We plan to maintain our $15.75 fair value estimate and view the shares as fairly valued at current levels. After the transaction is completed, Morningstar will no longer cover Travelport but will continue to cover peers Sabre and Amadeus, along with roughly 1,500 other companies. For those interested in the space, we’d suggest Sabre as a more attractive option, trading at more than a 25% discount to our valuation.

Travelport did not hold a conference call for its first-quarter results, but its 7% decline in platform volume was well below that of narrow-moat peers Amadeus and Sabre, with the former posting 1.6% air booking growth and the latter reporting a 2.7% total travel booking increase versus 0% market growth. While Travelport’s new agency wins in Asia-Pacific (22% of its total bookings) helped it post 16% transaction growth, decreased agency activity in its U.S. (36%) and Europe (25%) businesses drove a 16% and 17% drop in volume in those respective reasons. This supports our view that Sabre and Amadeus can continue to gain gradual distribution share over the next 10 years.