) has agreed to acquire
Wotif.com Holdings Ltd.
for a total cash consideration of A$703 million or $658 million
based on the exchange rates as of Jul 4, 2014. The transaction is
expected to be closed in the fourth quarter of 2014 subject to
Wotif shareholder and other regulatory approvals.
Following the announcement, Expedia and Wotif.com Holdings
shares surged 2.4% and 24.4%, respectively, in after-hours
Australia-based Wotif.com is an online travel company that
offers hotel rooms, airline tickets, and vacation packages in more
than 69 countries. The company has a number of online travel brands
in the Asia-Pacific region including, Wotif.com, lastminute.com.au,
travel.com.au, Asia Web Direct, LateStays.com, GoDo.com.au and
Arnold Travel Technology.
The Wotif.com acquisition will complement and enhance Expedia's
corporate travel portfolio with the addition of leading online
travel brands. Additionally, the deal will help increase the
company's exposure in the Asia-Pacific region while boosting
international revenues. In the last quarter, the company's
international business was down 1.8% sequentially but up 23.1% from
We believe that it is important for Expedia to expand
internationally, especially since China and other Asian countries
being relatively under-penetrated offer good growth opportunity.
Also, the strategy has worked well for its major competitor
), which owns Booking.com in Europe and Agoda.com in Asia.
To counter the increasing competition in the online travel
industry, the company has been making acquisitions and entering
strategic alliances. In June, Expedia agreed to acquire a European
online car rental company, Auto Escape Group, to expand into the
European car rental market. In 2013, Expedia signed a strategic
long-term marketing partnership with Travelocity to share the
workload related to searches, bookings and promotion.
We believe these alliances and acquisitions will help Expedia
grow in the future.
Expedia, one of the leading online travel companies in the
world, reported first-quarter earnings of 1 cent, in line with the
Zacks Consensus Estimate. However, revenues were $1.20 billion, up
4.2% sequentially and 18.6% year over year. While growth rates
across most brands were healthy, Expedia, Trivago and Hotels.com
were the strongest in the quarter.
Expedia has a Zacks Rank #3 (Hold). Other stocks that are
performing well at the current levels include
Everyday Health, Inc.
). All these stocks sport a Zacks Rank #2 (Buy).
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