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Expedia Completes HomeAway Acquisition; Shares Surge

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Expedia Inc.EXPE recently completed the acquisition of vacation rental site, HomeAway Inc. The acquisition worth $3.9 billion in cash and stock was announced earlier last month.

In response, Expedia's shares went up almost 5% to $130.24.

Austin, TX-based HomeAway provides an online marketplace of vacation rentals accommodations. The company's portfolio includes vacation-rental websites HomeAway.com, VRBO.com and VacationRentals.com through which apartments, castles, condos, estates, hotels, homes, studios, town homes, and villas are offered. It collects a fee from owners to publish detailed property listings, including photographs, descriptions, location, pricing, availability and contact information.

As per HomeAway, it has over 1 million paid listings of vacation rental homes across 190 countries.

Though the transaction will dilute Expedia's earnings per share in 2016, the first year of ownership, it will be accretive over the long run. Also, the company will be able to strengthen its presence in the incredibly profitable vacation rental market and gain competitive advantage against apartment-sharing start-up, Airbnb.

Airbnb's biggest competitor, VRBO, or Vacation Rental by Owner, which allows property owners to rent spaces without a business license, is owned by HomeAway.

Airbnb, in general, provides short-term rentals while HomeAway caters to travelers looking for one-week or longer stays. Therefore, the acquisition will give Expedia the opportunity to expand its options for consumers beyond hotels, boosting its efforts to build a place in the fast emerging alternative accommodations space, a market that Expedia values at around $100 billion.

Therefore, this deal will further expand the online travel-booking company's presence in the travel market.

Expedia carries a Zacks Rank #3 (Hold). Some stocks in the technology space worth considering are Mercadolibre, Inc. MELI , Stamps.com Inc. STMP and Autobytel Inc. ABTL . All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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