Even if you already have the world's largest computerized airline reservation system, it doesn't hurt to extend your reach further into Europe. In an effort to become the dominant travel reservation destination on the Web, SabreHoldings
Travel leaders Sabre, IAC/Interactive
The lastminute.com acquisition -- valued at $1.08 billion -- will give Sabre Europe's leading travel company, with some 2,000 employees who sell Internet flight and vacation packages in 13 countries. Sabre, Cendant, and IAC's Expedia compete ferociously for online bookings of airfare and hotel rooms, a segment that is growing quickly. Jupiter Media anticipates that as many as one-third of all reservations will be placed via the Internet by 2009, up from 6% in 2000. Forrester Research predicts leisure travel services in the U.S. alone will reach $110 billion by then.
While the deal gives Travelocity an expanded presence in Europe, it still faces competition from the ailing airlines, which are increasingly selling fares through their own Web sites. The acquisition will help to increase Sabre's leverage, enabling it to offer better prices to customers and remain competitive with the airlines own sites.
It's possible that one of Sabre's rivals could offer a competing bid before the deal is completed. At an offer price of $3.08 per share, Sabre's bid represents a 57% premium to lastminute.com's share price at the close on the day the deal was announced. Or it could snatch up another company. Travelzoo
If Sabre Holdings ultimately prevails in its bid, watch for the competition to start sharpening their own sabers, looking for some acquisitions of their own.
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Fool contributor Rich Duprey does not own any of the stocks mentioned in the article.