Sabre to Spin Off Travelocity.com Site

FORT WORTH —  Sabre Holdings Corp., the world’s No. 1 travel reservation company, said Monday that it will spin off its Travelocity.com Web site and combine it with Preview Travel Inc., an exclusive partner of America Online Inc., to create one of the nation’s largest Internet commerce sites.

Sabre will contribute Travelocity’s assets plus $50 million in cash to a new publicly traded company called Travelocity.com.

The plan comes less than two weeks after Microsoft Corp. filed to sell a minority stake in its Expedia travel site for as much as $75 million. Travelocity and Preview had combined travel-related revenue of $468 million in the first half, more than Expedia’s, and expect that to top $1 billion for the year.

“It’s a fantastic deal and catapults them ahead of Expedia,” said Michael Kim, an analyst with Wedbush Morgan Securities, who rates Preview Travel a “buy.” “It’s putting them on track to dominate this market.”

Travelocity and Preview will meld their sites on the Web to keep characteristics of both. The combined company will have 17.7 million registered members and 7.9 million visitors monthly.

Under the plan, Preview Travel shares will convert into shares of the new Travelocity.com at a 1-1 ratio, or $336 million based on Monday’s close. Sabre will own 70% of the new company’s outstanding shares and Preview shareholders will hold the rest.

Sabre also said Travelocity signed a five-year contract with America Online to make it the exclusive reservations agent for all travel services on AOL. The agreement gives Travelocity a share of travel-related advertising revenue. America Online, the No. 1 Internet service, values the pact at as much as $200 million.

Fort Worth-based Sabre also said it extended terms of a similar agreement with Yahoo Inc., which will take a minority stake in the new Travelocity.

Sabre was spun off from AMR Corp., parent of American Airlines, in 1996, and the airline company still owns 83% of its stock. AMR shares rose $5.28 to $59.25 on the New York Stock Exchange.

Sabre shares jumped $6.13 to close at $49.50 on the NYSE, while Preview Travel surged $6.69 to $24.31 on Nasdaq.