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Carlyle, Certares Settle Suits Over Failed AmEx Travel Deal

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Jef Feeley, Michael Leonard and Jenny Surane
·3 min read
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(Bloomberg) -- Carlyle Group Inc. and a unit of Certares Management LLC have settled dueling lawsuits over a failed deal in which Carlyle reneged on buying a 20% stake in American Express Global Business Travel in the wake of the Covid-19 outbreak.Carlyle, one of the world’s largest private equity firms, and Certares, which invests in the travel industry, notified Delaware Chancery Court Judge Joseph Slights III in a Feb. 8 filing that they were dropping their suits and covering their own legal costs.

The funds and their affiliates have reached a “confidential settlement agreement amicably resolving all outstanding litigation arising from the transactions contemplated” in the December 2019 deal, according to a statement issued by Brittany Berliner, a spokeswoman for Carlyle, and Alex Stockham, a spokesman for Certares’ Juweel unit, through which the shares were to have been sold to the Carlyle-led group.

Certares led a group including the Qatar Investment Authority that acquired a 50% interest in American Express Co.’s corporate travel services unit for $900 million in 2014. At the time of its announcement, Carlyle’s $1.5 billion stock-purchase deal valued the entity at $5 billion.

In its suit, Certares called Carlyle’s decision to pull out the result of a large dose of buyer’s remorse after the worldwide Covid-19 pandemic virtually killed business and vacation travel last year. The deal was valued at $5 billion when it was announced in 2019.

Busted Deals

The dispute was among a half-dozen busted deals tied to Covid-19 that landed in Delaware’s business court. The state is the corporate home to more than half of U.S. public companies and more than 60% of Fortune 500 firms. Slights and other chancery judges hear cases without juries and can’t award punitive damages.The corporate travel business was growing before the advent of Covid-19, with companies spending more than $305 billion on travel in 2018, a 4.5% gain from the year earlier, according to Bloomberg Intelligence, citing data from the Global Business Travel Association.

Before the pandemic, AmEx said the travel business, in which still retains 50% ownership, had 18,000 employees that handled $35 billion worth of corporate travel a year. That has likely fallen sharply as more people work from home and both leisure and business travel have been restricted.

Carlyle, which led a group of investors in the tanked AmEx travel unit deal, including the Singaporean sovereign wealth fund GIC Pte, backed away after it said sellers violated some of the contract’s terms. That gave buyers the legal right to pull out, Carlyle’s lawyers argued.

Juweel said the contract dispute was pretextual, and Carlyle and GIC were actually having second thoughts about investing in the travel industry during the pandemic.

The case is In re Global Business Travel Share Purchase Agreement Litigation, 2020-0338, Delaware Chancery Court (Wilmington).

(Updates to add spokeswoman’s name in third paragraph)

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