EDS, Sabre get approval for giant outsourcing deal

Electronic Data Systems (EDS) and Sabre Holdings have received approval from the U.S. Department of Justice for a multibillion-dollar deal in which Sabre will sell its airline IT outsourcing business to EDS, the companies said in a statement on Friday. They expect to close the transaction July 2.

Under terms of the deal, which was announced in March, EDS will manage Sabre's IT systems under a 10-year, US$2.2 billion contract, and the companies will jointly market IT offerings to the travel and transportation industries. Some 4,200 Sabre employees, mostly in the U.S., will switch to EDS, the companies have said.

The deal also calls for EDS to acquire Sabre's airline outsourcing unit and its internal IT infrastructure assets for $660 million. The outsourcing unit generated about $600 million in revenues for Sabre in 2000, the companies said.

Sabre retains net working capital of approximately $108 million, bringing the value of the deal for Sabre to approximately $768 million, the companies said.

The DOJ asked for "minor adjustments" before it would approve the merger, the companies said. They said the main change is that EDS will retain its airline reservation system, called SHARES, rather than transfer it to Sabre, as had originally been planned. Changes were also made to the joint marketing agreement to enable EDS to independently operate and sell SHARES to clients who want the product, the companies said.

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