The travel industry is currently dominated by the news that two of the largest TMCs (Travel Management Companies) are set to merge in a deal that could be worth £410 million. The deal, if completed, could see one of the American Express’ branch arms Global Business Travel owning the Hogg Robinson Group, a company which was originally opened in the 1840s. Hogg Robinson has also agreed to part with the Fraedom payment management software to Visa.

The sudden news of the possible conjoining of the two companies saw shares in the Hogg Robinson Group rise by nearly 50%.

The takeover is expected to be confirmed by next month and finalised in the following quarter; the deal, however, requires that the Hogg Robinson Group confirm the approvals from shareholders. Reports indicate that consent will be easily achieved with two of the largest shareholders agreeing to sell their investments in the company to American Express. Despite this, requirements state that 75% or more of the shareholders need to accept the offer in order for it to go ahead; not to mention, the need for regulatory approval in a number of jurisdictions, including the US and the EU.

According to the chief operating officer at Hogg Robinson, William Brindle: “[This] deal is attractive for Hogg Robinson Group’s shareholders and an exciting next step for Fraedom”. However, proposal documents suggest that American Express is looking to reduce the workforce of both combined companies by around 6-8%, ensuring that only the best talent is maintained within the organisation.

The offer document indicated the merger was one of Amex GBT’s cost reduction techniques, stating that it was a “significant opportunity to remove costs”, whilst also allowing them to be competitive in the marketplace.

But what about the customers of Hogg Robinson? Talks suggest that the merged entity will provide business customers with a wide range of exciting travel products and services, whilst internally, technology and a strong infrastructure will “maximise efficiencies”, not only for the company itself but for the organisations that utilise their services, according to American Express.

If you’re an organisation with TMC travel spend and want to discuss how this merger will impact your organisation’s travel arrangements, get in touch with our specialists today. We have years of experience in providing businesses with comprehensive costs reviews and advice to ensure business efficiency.

Article by: Barry Donovan