The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Sebastian Pellejero

NEW YORK, May 6 (Reuters Breakingviews) - Few pockets of the post-pandemic recovery have been as bumpy for public shareholders as work-related trips. American Express Global Business Travel GBTG.N is taking the hint. The company agreed to be acquired by Long Lake Management, a buyout firm that retrofits companies with artificial intelligence, for $6.3 billion in cash, a 60% premium. It's a good time to head for the exits.

Corporate travel has largely recovered from Covid-19. After buying rival Egencia in 2021, Amex GBT processes more than $30 billion in bookings annually. Revenue grew 12% to more than $2.7 billion last year, while generating a 4 percentage point increase in EBITDA margin to roughly 20%. Despite these improvements, the stock has tumbled nearly 40% since going public via an Apollo Global Management shell company in 2022.

Size has its limits. Video calls have permanently displaced a portion of client visits and office retreats. Airlines and hotels now push directly to travelers, eroding the pricing power of intermediaries. The war in Iran also casts a shadow over corporate budgets and as jet fuel costs climb.

Here, Long Lake sees a window of opportunity. Its pitch, backed by General Catalyst Chairman and former American Express AXP.N boss Ken Chenault, is that AI can help automate people-heavy processes and make stodgy middlemen leaner and stronger defensively. At about 10 times projected 2026 adjusted EBITDA, the purchase price is roughly in line with the industry median, according to Visible Alpha.

Assume the deal is half-funded with equity, and debt would equal almost 5 times this year's forecast EBITDA. With 10% revenue growth, steady margins and a similar sale valuation in five years, the annualized return pencils out to 25%, Breakingviews calculates. Even if AI never fully lands, the buyer looks well-positioned.

For sellers, the calculus is even simpler. Big backers dominate Amex GBT's shareholder register, with travel website Expedia EXPE.O and the Qatar Investment Authority sovereign wealth fund among them. After nursing losses since going public, the takeover bid will make them nearly whole. Some may opt to roll their equity and stay for a longer ride.

Charge-card giant American Express comes out sky-high. It plans to sell its 30% stake, booking a near-billion-dollar pre-tax gain in the process. Sometimes it's the destination, not the journey.

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CONTEXT NEWS

American Express Global Business Travel said on May 4 it had agreed to be acquired by private equity firm Long Lake Management for $9.50 per share in cash, valuing the company at about $6.3 billion.

Investors including American Express, Expedia Group, Qatar Investment Authority and BlackRock support the sale. Charge-card giant Amex, which spun off the business in 2022, said it would sell its roughly 30% equity stake as part of the deal.

Rothschild & Co is advising Amex GBT's special board committee. Citi, JPMorgan, and Bank of America are advising Long Lake and Moelis is advising Koch Equity Development.