Let’s Call The Whole Thing Off: Outcome-Critical UK Intervention In US-Centric M&A

By Simon Pritchard, Jonathan Ford & Verity Egerton-Doyle (Linklaters)

And the music stops. Texas-based Sabre Corp. had beaten the DOJ in federal court in the agency’s challenge to its $360m deal to buy Miami-based Farelogix Inc. But on April 9th, only two days later, the acquisition was blocked by the UK’s CMA. Well before this point, Sabre had felt obliged to protest to the CMA head-on that its deal was “not a killer acquisition”.

But the CMA treated this argument as close to surreal. Sure, the famous painting by René Magritte may be captioned «ceci n’est pas une pipe»… but to the agency it looked damn near certain to be a pipe. On substance, the DOJ and CMA both called “fire” having smelled the “smoke” in certain provocative Sabre text messages and Farelogix statements. Both characterised the deal as Sabre eliminating a “disruptive force” that would reduce airlines’ bargaining power and harm innovation.

The transatlantic similarities end there, however. Farelogix supplies technology to (primarily US) airlines that enables them to create and transmit end-user sales offers to travel agents either directly and bypassing the traditional GDS platform (where Sabre is US #1 and global #2) or using GDS as a passive distribution channel and therefore more cheaply. But as far as UK deal nexus goes, Farelogix had no direct British airline customers. Or any other UK customer, or revenue, or market share, it seems.

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