Worldspan has postponed a $677 million initial public offering (IPO) of its common stock, citing market conditions. The global distribution system (GDS) company says it will "continue to evaluate market conditions and may proceed with a public offering later".
The company, which was spun off from its former airline owners in 2003 in a $901 million deal, had been expected to gain as much as $645 million in the flotation, according to Standard & Poor analyst Betsy Snyder.
The company had assumed that shares could fetch between $19 and $21, although investors had focused on $16 to $18 a share, according to one of its underwriters.
Although the IPO market in all industries cooled with the advent of higher interest rates, some hi-tech offerings - such as that planned by search engine Google - have attracted fervid attention and the second quarter witnessed one of the highest number of IPOs since the hi-tech bubble burst in 2000.
Worldspan announced its IPO plans in March and detailed the pricing in June. Snyder says that the GDS, bought by private investment funds in 2003, had adequate liquidity.
US Transportation Department regulation of the GDS industry fades this summer as a ban on display bias sunsets, leaving some uncertainty. The company faces growing competition from internet outlets - even though it provides "backroom" services for many of them - and from airline direct web offerings.
Rival Sabre says it anticipates better-than-expected profitability at its Travelocity unit. Travelocity's strong prospects come as the three major on-line agencies have made major inroads with corporate travel departments.
Source: Airline Business
