Lastminute soars on US bid approach

Lastminute.com, the online travel company whose flotation marked the end of the dot.com boom in 2000, is set to lose its independence after receiving a takeover approach from Sabre Holdings, the US rival which owns the Travelocity website.

Sabre's interest in buying lastminute sent the company's shares soaring 45.4 per cent, to 153.25p, putting a value of £522m on the company.

Analysts believe Sabre's interest could trigger a bidding war for the business, with the most likely rivals to Sabre being the entrepreneur Barry Diller's InterActiveCorporation, which owns Expedia, and Cendant, the travel and property group that owns ebookers.

Lastminute's 2,000 employees across 13 European countries will be waiting nervously to see who eventually buys the business. However, a US buyer could mean that a number of lastminute's jobs are preserved.

The online travel industry has seen a wave of deals as trade buyers have snapped up brands and slashed costs. Lastminute, which bought 14 companies in five years, including Holiday Autos, is seen as perhaps the biggest brand in the business but it has struggled to make profits since its flotation five years ago.

Its most recent annual results showed turnover of £440m on transactions conducted valued at £992m. Although the group made pre-tax profits of £4.5m before exceptional items and goodwill amortisation, it made an overall loss of £77.2m for the year to 30 September.

But by combining the brand name with a technology platform supporting other online businesses, and significantly cutting overheads, a buyer could transform the operation into a profitable enterprise.

Despite yesterday's share price surge, investors who bought into the company's shares when it floated at 380p in March 2000 stand no chance of seeing that price again.

Although the company's shares briefly rose after the float, they soon began a long descent, crashing as low as 17p.

The company's float marked the high-water mark in the technology boom with markets all over the world crashing just days after.

Founded by Brent Hoberman and Martha Lane Fox, who stood down from the company in late 2003, lastminute came to define the irrational exuberance of stock market investors during the technology boom.

A sale is unlikely to trigger a bumper payout for its directors, including Mr Hoberman who may well stay with Sabre after a deal is completed.

His service contract stipulates that he will not receive any payment for a change of control. If he leaves he will receive six months' pay.

Mr Hoberman has 151,335 shares under a 1998 share-option plan, with an exercise price of 2.31p and another tranche of 140,187 shares at an exercise price of 107p. However, he has a tranche of 150,667 shares at an exercise price of 232p.

Sabre, based in Southlake, Texas, has been around since the 1960s, when it developed the first computer reservations system.

Its other businesses include a worldwide system to connect travel agents and travel companies called Sabre Travel Network, and a consulting service for airlines.

Listed on the New York Stock Exchange, the company employs about 6,000 people and hasannual revenues of more than $2bn ((pounds sterling)1bn).

Sabre's move on lastminute.com comes after its chairman and chief executive, Sam Gilliland, has stood by while rivals such as Mr Diller have snapped up businesses to increase their size in the online market.

In January, Mr Diller added Ask Jeeves to his media and travel empire. Despite pioneering the online travel agency market, Travelocity lost momentum to Expedia. It plunged into the red and was bought by Sabre in 2002.

The company has been struggling ever since to regain the No 1 position from Expedia.

Sabre did not return telephone calls.

- INDEPENDENT