Amadeus: Report of Payment Processing Acquisition Sparks Leverage Concerns, Sending Shares Down 7%

Shortly after narrow-moat Amadeus' 2023 earnings release on Feb. 28, Reuters reported that the company was potentially looking to acquire payment processing firm Shift4 Payments. This sent Amadeus shares down 7% on Feb. 29. From a strategic standpoint, we see merit in the company expanding its payment offering to compete with other travel platforms that have made similar investments to better facilitate the numerous and differing payment options across the world. We think the adverse share reaction is tied to the debt and/or equity that would be required to swallow up Shift4 Payments at a time of elevated uncertainty about the recovery potential of global distribution system industry air bookings.