) recently completed its acquisition of a 61.6% equity stake in
hotel search website Trivago for approximately €434 million (or
$564 million) in cash. The company will also issue 875,200 shares
of Expedia stock over five years.
Trivago is a German metasearch company that focuses on hotels.
It compares more than 600,000 hotels across 140 booking sites in
more than 30 countries and 23 languages. Trivago co-founders and
management team will continue to operate independently from
The acquisition will allow Expedia to further boost its
corporate travel portfolio and expand into the European online
travel market. The deal will boost cost-efficiency measures and
help Expedia pick up some market share. Additionally, management
expects the acquisition to be accretive to adjusted earnings per
share in 2013.
We believe that it is important for Expedia to expand
internationally, especially since the strategy has worked so well
for its main competitor
), which owns Booking.com in Europe and Agoda.com in Asia.
Expedia is one of the leading online travel companies in the
world. In the fourth quarter, the company's earnings were 3 cents
short of the Zacks Consensus Estimate although revenues exceeded
by 4.7%, helped by a stronger travel market all over the world,
contribution from the VIA acquisition and strategic expansion in
Asia. We expect the business to continue on the growth path owing
to the wide range of accommodation options that Expedia is now
able to offer.
Currently, Expedia retains a Zacks Rank #3 (Hold). Other
competitors that have been performing well and are worth
Bitauto Holdings Limited
), and Priceline.com, all carrying a Zacks Rank #2 (Buy).
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