Travelport shares jump 17 percent as hedge fund Elliott buys stake

(Reuters) - Shares of Travelport Worldwide Ltd TVPT.N jumped 17 percent on Monday after activist hedge fund Elliott Management Corp disclosed a large stake and said it might try to purchase the travel software company outright. The move is the latest example of how Elliott uses its private equity arm, Evergreen Coast Capital Partners, to pressure companies to explore a sale. Elliott successfully used the strategy on LifeLock, which was later sold to Symantec Corp SYMC.O.

Elliott, which bought a stake of roughly 12 percent, will encourage Travelport to launch the sale process and seek to participate, the fund said in a filing with the U.S. Securities and Exchange Commission.

Elliott has held talks with investment banks to raise financing for a potential bid, according to sources familiar with the matter who requested anonymity to discuss confidential deliberations.

Travelport said in a statement about Elliott’s stake that it has regular dialogue with shareholders “and, in this context, considers contributions made by all shareholders about the development of Travelport’s strategy.”

A spokesman for Elliott declined to comment.

Shares in Travelport jumped $2.45 to $16.80 late Monday afternoon, pushing the company’s market capitalization past $2 billion.

If Elliott is successful in buying Travelport, it could represent the largest leveraged buyout the fund has led, rather than in collaboration with other private equity firms.

Elliott's first acquisition of a public company, the $1.6 billion takeover of network software firm Gigamon Inc GIMO.O, closed late last year. As with Travelport, Elliott had pushed Gigamon to sell itself by offering to buy it.

While activist investors such as Carl Icahn have made offers to buy companies before, New York-based Elliott, with assets of more than $33 billion, is the biggest hedge fund with a dedicated team chasing buyouts. Elliott partner Jesse Cohn leads the buyout efforts for Elliott.

Travelport, based in Britain but traded in the United States, is no stranger to private equity. Blackstone Group LP BX.N acquired Travelport along with Technology Crossover Ventures for $4.3 billion in 2006 and took it public in 2014. It is trading about flat to its IPO price.

“We believe this is a stock that can benefit from an activist investor who will look to further optimize the business and bring attention to the company,” said Bernstein analyst Mark Moerdler in a note.

Travelport had about $2.4 billion in net revenue last year. Its main rivals, Sabre Corp SABR.O and Amadeus IT Group SA AMA.MC, have both been previously owned by private equity firms.