Egencia to Acquire VIA Travel

Expedia Inc.’s ( EXPE - Analyst Report ) corporate travel management arm Egencia has agreed to acquire Oslo, Norway-based leading travel management firm VIA Travel. The terms of the deal were not disclosed and the closing of the transaction is subject to various regulatory approvals.

VIA Travel is the largest travel management company in the Nordic countries. The company offers corporate travel services, as well as services for corporate groups and meetings, leisure travel, and marine transport.

The acquisition will allow Egencia to further boost its corporate travel portfolio and expand into the European online travel markets, which is still relatively untapped. The deal will boost cost-efficiency measures and help Expedia to gain market share. In December, Egencia acquired France-based Traveldoo with a strategy of keeping separate entities for the two brands and expand more rapidly across the world.

Expedia is one of the leading online travel companies in the world and Egencia, the company’s corporate travel business, is a growing part of Expedia Inc.'s overall business. In the fourth quarter, though Expedia missed estimates on both the top line and bottom line, Egencia (corporate) segment performed well.

Despite the rising air fares, corporate spending on travel continues to pick up. Egencia increased at a double-digit year-over-year in each of the last nine quarters and growth rates appear sustainable. We expect the business to continue on the growth path, due to the greater choice of accommodation that Expedia is now able to offer.

The company will continue to face challenges from players like Priceline.com ( PCLN - Analyst Report ) , Orbitz Worldwide ( OWW - Snapshot Report ) and Travelocity, as well as a growing number of local Chinese players that could make expansion in the fast-growing Chinese market difficult.

We have a Zacks Rank of #3 on Expedia shares, which translates to a short term Hold rating.