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Sabre is frustrated that the U.S. Department of Justice has held up its acquisition of Farelogix. Nine months ago it had proposed buying the airline distribution technology specialist.
So on Wednesday the travel technology giant said it would go ahead with the $360 million acquisition on August 21.
“Over the past nine months, we believe we have done all we can to address the DOJ’s concerns,” said Sean Menke, president and CEO of Southlake, Texas-based Sabre, in a statement.
Sabre and Farelogix said they extended the termination date of their acquisition agreement to April 30, 2020 in case the Justice Department chooses to sue. If Justice pursues a complaint on antitrust grounds, Sabre could face significant court costs and a protracted battle.
“While we hope the DOJ will ultimately recognize that this transaction is pro-competitive, we are prepared to vigorously defend the deal in court if necessary,” Menke said.
Government officials haven’t said in public why they flagged the transaction for a closer look. Skift requested a comment from the Justice Department and will update this story if and when we receive it.
It’s unusual for a company to go ahead with a deal while the Justice Department is reviewing it.
Some observers speculated that representatives of at least one major U.S. airline had lobbied for a review.
Sabre remains in ongoing litigation in U.S. courts over antitrust issues with parent company American Airlines Group over its acquisition US Airways and with Lufthansa over contract terms.
Both American Airlines and Lufthansa have been large customers of Farelogix’s products. The carriers have tapped some of Farelogix’s tech to supplement their direct connection systems. Their goal was to reduce some of the involvement of Sabre in their retailing and distribution of fares.
Menke recently wrote a letter to its airline customers promising to continue to offer Farelogix products at the same prices available today or lower and to support and invest in those products at the same level or higher.
He also promised to offer to extend any existing Sabre distribution or Farelogix Open Connect contract on the same terms, including price, for at least three years.
Why push ahead? One speculation would be that Sabre executives worry that the Justice Department won’t act otherwise. They may fear the attorneys will be too tied up with other priorities between now and late next year. Sabre aims to force the agency’s hand.
“Sabre and Farelogix do not believe that litigation is appropriate in this matter,” a company statement said about the Farelogix deal. Sabre described the federal agency’s review of the acquisition as “lengthy and exhaustive.”
As of early morning trading on Wednesday, investors had a muted reaction. Sabre’s shares were down slightly, in line with a broader market slide presumably tied to broader market news.
Photo Credit: Sabre CEO and president Sean Menke spoke at Skift Tech Forum in June 2018. Menke has been frustrated that Justice Department officials have held up the tech giant’s proposed acquisition of Farelogix. Skift