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Sabre Raises $627 Million in Its IPO, Lower Than Expectations

Apr 17, 2014 5:00 am

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The lower price reflects both a softened market for tech IPOs, as well as challenges particular to Sabre.

— Rafat Ali

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Sabre Corp., the travel software and data company that operates the Travelocity website, raised $627 million in its initial public offering, pricing a reduced number of shares below the marketed range.

The company, which says its technology processed more than $100 billion of estimated travel spending last year, sold 39.2 million shares for $16 each, according to a statement today, 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.

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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. — has declined 4.2 percent since reaching a 14-year high on April 1.

The shares will be listed on the Nasdaq Stock Market under the symbol SABR and will start trading tomorrow. Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp. and Deutsche Bank managed the offering.

To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net To contact the editors responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net. 

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