By Dow Jones Business News, September 25, 2013, 09:02:00 AM EDT
By Saabira Chaudhuri
American Express Co. ( AXP ) on Wednesday unveiled plans to form a joint venture for its corporate-travel business with
an investor group led by Certares, a move that comes after the New York company earlier this year unveiled job cuts at
the travel division.
Under the proposed terms of the deal, American Express would maintain a 50% ownership stake in the joint venture,
which would continue to operate under the American Express Global Business Travel brand. The investor group, which would
own the remaining 50%, would invest between $700 million and $1 billion in the business.
The deal is expected to close by the second quarter of next year. American Express will recognize a gain at that time.
Responding to the rise of do-it-yourself policies that ask employees to book work trips online rather than calling an
AmEx travel agent, American Express in January revealed it was making moves that would result in the loss of 5,400 jobs.
Those cuts have been part of American Express's push to develop more technology-based services that can handle bookings
and other travel arrangements quickly and cheaply.
"We've been making strong progress in our efforts to transform our corporate travel business," Group President of
Global Corporate Services Stephen J. Squeri said in a press release. He noted that, following the job cuts earlier this
year, the joint venture is the next phase of American Express's push to accelerate the growth of its travel business
through additional investments that will allow the company to expand its offerings.
American Express's consumer travel business, which provides card members and other consumers with travel benefits and
services, isn't part of the proposed deal.
American Express, founded in 1850, began selling traveler's checks in 1891 and established its travel business in
1915, selling tickets for rail and steamship trips to places including Alaska, Cuba and South America.
American Express was tarnished in the financial crisis by an ill-timed bet on less-affluent credit-card customers.
The credit-card company became a bank holding company at the height of the financial crisis, in a move aimed at making
it eligible for low-cost financing from the Federal Reserve.
Shares of American Express edged down by seven cents to $76 in light premarket trading. The stock has risen 32% so far
-Robin Sidel and Andrew R. Johnson contributed to this article.
Write to Saabira Chaudhuri at email@example.com
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