Carlyle, GIC backing out of American Express deal

Washington

CARLYLE Group Inc and Singapore sovereign wealth fund GIC Pte Ltd are backing out of a deal to buy a stake in American Express Global Business Travel, which has been hit hard by the global pandemic.

The parties were in talks to renegotiate terms of the deal, which was set to close last week, but the groups couldn't reach an agreement, according to people familiar with the matter. The deal, announced at the end of 2019, valued the American Express Co unit at US$5 billion, including debt. Carlyle and GIC agreed to purchase a 20 per cent stake and American Express planned to retain 50 per cent ownership.

The travel industry has been roiled by the coronavirus, with companies seeing huge drops in revenue and much of their workforce furloughed. The American Express unit offers travel services primarily to businesses that need to book airfare and hotel rooms.

The corporate travel business is growing. More than US$305 billion was spent on such travel in 2018, a 4.5 per cent gain from the year earlier, according to Bloomberg Intelligence, citing data from the Global Business Travel Association.

The other half of the travel unit was already owned by Certares, and other investors including the Qatar Investment Authority.

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Earlier last week, the sellers were trying to keep the deal intact by filing a motion in Delaware Chancery Court against Carlyle and GIC. Carlyle then filed a lawsuit against the seller. BLOOMBERG