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Amadeus Raises $1.74 Billion in Western Europe's Biggest IPO Since 2008

Date: Wednesday, April 28, 2010
Author: Bloomberg

Amadeus IT Holding SA raised 1.32 billion euros ($1.74 billion) selling shares above the midpoint of its original price range in western Europe’s biggest initial public offering since 2008.

The flight-reservations provider controlled by BC Partners Ltd. and Cinven Ltd. priced 119.68 million shares at 11 euros each, Amadeus said in a statement today. The Madrid-based company had narrowed its original price range of 9.20 euros to 12.20 euros twice yesterday, according to two people familiar with the matter. The deal will give Amadeus a market value of 4.93 billion euros when it starts trading on April 29.

The sale comes after Blackstone Group LP’s Travelport Ltd., which competes against Madrid-based Amadeus for travel reservations, postponed its IPO in February. Private-equity firms have since used a rebound in equity markets to sell assets after returning less money to clients in 2009 than any year on record. Brenntag AG, the German chemicals distributor also owned by BC Partners, and Kabel Deutschland Holding AG both raised more than $1 billion in offerings last month.

“Amadeus is the one that everyone is looking for,” Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC and manager of the Direxion Long/Short Global IPO Fund, said before the final pricing. The offering “underlines the changing landscape of the European IPO market,” he said.

EDP Renovaveis, Essar

The initial sale is the biggest in western Europe since EDP Renovaveis SA’s 1.57 billion-euro deal in June 2008, according to data compiled by Bloomberg. Essar Energy Ltd., a unit of Mumbai-based Essar Group, is also seeking to raise about $2.5 billion later this month in an IPO that would be London’s largest since 2006.

Companies in western Europe last quarter sold $6.1 billion through IPOs, 69 percent more than U.S. offerings, data compiled by Bloomberg show. That’s the biggest gap since the last three months of 2007, when the MSCI World Index of 23 developed countries climbed to a record.

JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley of New York managed Amadeus’s sale.

BC Partners and Cinven of London controlled Amadeus after a 4.34 billion-euro leveraged buyout in 2005. Paris-based Air France-KLM Group and Deutsche Lufthansa AG of Cologne hold minority stakes and also sold shares.

Debt Repayment

Amadeus, whose revenue dropped 1.8 percent to 2.5 billion euros in 2009, said that it will use the 910 million euros in gross proceeds from the offering to pay down debt. The company had net debt of about 3.3 billion euros, 3.6 times its earnings before interest, taxes, depreciation and amortization last year. Bellevue, Washington-based Expedia Plc, the biggest Internet travel agency, has a ratio of 0.24.

The IPO gave Amadeus an enterprise value, or the sum of its stock and debt minus cash, of about 8.21 times Ebitda, based on estimates from London-based IPO research firm Independent International Investment Research Plc and Bloomberg data compiled before the final pricing.

That’s lower than the valuations commanded by Expedia and Priceline.com Inc. of Norwalk, Connecticut, which trade at 8.46 times and 21.44 times enterprise value-to-Ebitda, respectively, the data showed.

Amadeus was started in 1987 by Air France, Iberia Lineas Aereas de Espana SA, Lufthansa and SAS to give them an alternative to distribution systems controlled by U.S. airlines, according to Hoover’s Inc. About 102,000 travel agencies and more than 36,000 airline sales offices use its distribution system, which books flights on more than 450 carriers.

Volcano, T-Solar

The offering came after a volcanic eruption in Iceland this month spurred a shutdown of European airspace that forced the cancellation of more than 100,000 flights. Amadeus priced its deal on the same day that the Stoxx Europe 600 Index posted its biggest drop since November and Madrid-based Grupo T-Solar Global SA postponed its IPO, citing an “uncertain regulatory situation” in Spain.

Private equity-backed IPOs had suffered setbacks in February after the Stoxx Europe 600 gauge slid for four straight weeks, with Travelport and New Look Group Plc, owned by Permira Advisers LLP and Apax Partners Worldwide LLP, both postponing London offerings.

The Stoxx Europe 600 measure has since rebounded 10 percent from its 2010 low on Feb. 5.