Sabre and Private Equity Buyouts
December 12, 2006
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January 10, 2007
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Sabre and G2 Collaboration

Travel Weekly reported today that Sabre is exploring possible collaboration with G2 SwitchWorks. This is based on a comment made by Sabre CEO Sam Gilliland in response to a question from a Sabre employee on December 12th. Texas Pacific Group one of the private equity companies that purchased Sabre also holds a 20% stake in G2 Switchworks. What does all this mean? This could be a good test on whether the equity buyout truly impacts Sabre’s strategic direction. Some pundits have voiced their view that the equity buyout will free up Sabre from the constraints of public ownership allowing the company to innovate. Another camp, looks at the acquisition as a short term cash cow for the new owners, who will likely seek to reduce costs at Sabre while positioning the company for a future sale. Remember that private equity’s primary interest is bringing a good return back to its investors. If Sabre does pursue a relationship with G2, this would be a sign that the traditional “not invented here” philosophy is changing. G2 has been struggling to differentiate itself in light of the new GDS/airline agreements. How could the two really work together? If G2 continues to position their solution as an aggregation tool a layer above the GDS it would not be in Sabre’s best interest to partner with a company who is essentially eliminating their traditional single source GDS model. On the other hand where the aggregation point lies is not as important as who owns middleware. G2 could benefit if Sabre where to endorse the G2 travel agent point of sale tool and help distribute it to the large Sabre subscriber base. This is an interesting story to watch as we enter the new era of private equity owned GDS.