Back to top

Analyst Blog

Expedia Inc. (EXPE - Analyst Report) has agreed to acquire a 61.6% equity stake in hotel search website Trivago for a total of €477 million  or roughly $632 million.

The payment includes €434 million in cash and the remaining €43 million in Expedia stock. The acquisition is expected to close in the first half of 2013, subject to various regulatory and anti-trust approvals.

Trivago is a German search company that focuses on hotels. It compares more than 600,000 hotels across 140 booking sites in more than 30 countries and 23 languages. The company expects to exceed €100 million  (or about $132 million) in net revenue for 2012.

The acquisition will allow Expedia to further boost its corporate travel portfolio and expand into the European online travel markets. The deal will boost cost-efficiency measures and help Expedia pick up some market share.

Upon the completion of the deal, Trivago co-founders and management team will continue to operate independently from Germany. Management also expects the deal 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 (PCLN - Analyst Report), which owns in Europe and in Asia.

Expedia is one of the leading online travel companies in the world. In the third quarter, the company reported strong results, exceeding estimates on both the top and bottom line, helped by a stronger travel market all over the world, contribution from the VIA acquisition and strategic expansion in Asia. The company’s cash and short-term investments were $2.36 billion at the end of the quarter.

We remain encouraged by Expedia’s strong cash position and believe that the company has sufficient financial resources to acquire Trivago. We expect the business to continue on its growth path, due to the greater choice of accommodation that Expedia is now able to offer.

Also, recently, management declared a special cash dividend of $0.52 per share, which was in addition to the company's regular quarterly cash dividend of $0.13 per share. We believe that these special dividends speak about the company’s healthy cash position and are a good way of encouraging investor confidence as they return shareholder value.

However, the company will continue to face challenges from players like Priceline, 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.

Currently, Expedia retains a Zacks #2 Rank (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%