Amadeus ended months of speculation with the announcement that it had selected two UK-based investment firms, BC Partners and Cinven, to take the global distribution system (GDS) to a public offer valued at up to $5.6 billion.

Amadeus, owned by Air France, Iberia and Lufthansa, had also considered bids from two US firms, the Carlyle Group and Citigroup Venture Capital (CVC). Because CVC also owns a controlling stake in Worldspan, there was speculation that if successful it would have merged or consolidated Amadeus and the Atlanta-based GDS.

Worldspan was owned until two years ago by US airlines, and Citigroup had led its divestiture. Worldspan chairman Rakesh Gangwal predicted consolidation within the distribution sector, while executives of the other likely acquirer, Galileo parent Cendant, say they planned no further major acquisitions. Air France, with a 23% stake in Amadeus, Lufthansa with 5% and Iberia with 18% say they intend to remain as shareholders. The three other GDSs, Galileo, Sabre and Worldspan, are now free from airline control.

Carrier divestiture of the three big US systems led the US Transportation Department to phase out regulation of GDS behaviour and business practices, while deregulation in Europe is on the way. But many believe consolidation within the sector is inevitable.

Source: Airline Business