04 May 2007

Oops - Blackstone hits snag in pursuit of Worldspan

The EU has decided that it has "serious concerns" which will place the Blackstone/Travelport acquisition of Worldspan under the microscope. Frankly this should be a non-event. The total market for reservations services is not that great. So the scope of the review seems somewhat out of whack with the general industry view.

However - it may be that this is an indication from the EU of how they view GDS deregulation although that would be a stretch since a different group inside the EU is looking at the issue - Transportation (Jacques Barrot) vs the DG on Competition (yes Neelie Kroes's group) who are looking at this merger.

The story so far is that - On 23 March 2007, the Commission received a notification of a proposed concentration pursuant to Article 4 and following a referral pursuant to Article 4(5) of Council Regulation (EC) No 139/2004 (1) by which the undertaking Travelport Inc. (‘Travelport’ USA) a subsidiary of The Blackstone Group (‘Blackstone’ USA) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of Worldspan Technologies Inc. (‘Worldspan’ USA) by way of purchase of shares.
On March 30th it issued a 10 day notice for comment. That has now been done and yes they feel there will be concentratio which opens the docket for a deep investigation. This can take up to a year.

So what's going to happen? The options for WSP and Galileo are not pretty. So they will probably have to go through the erosion of marketshare and the collapse of WSP's US and EU business or seek an expedited review. With Rakesh and crew mentally checking out - this will be hard on the rank and file.

The chaps in Axis House and at the Galleria are probably longing for the Halcyon days of Roy Burnham and Neil Beck.

Stay tuned. This one is going to run for a while.



PS disclosure - I was Head of International Technology for Worldspan from 1990-1996 based in London.

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