HomeAway shares soared as much as 27% after Expedia agreed to acquire the vacation-rental company for $3.9 billion, and investors speculated the bid may prompt a counteroffer from another rival such as Priceline Group.
Expedia will pay $38.31 a share for HomeAway, the companies said in a statement after the close of trading on Wednesday. That's 20% higher than Austin, Texas-based HomeAway's price before the deal was announced. The stock rose 25% to $39.95 at 11:38 a.m. on Thursday in New York after earlier reaching $40.76. Expedia shares jumped 4.4% to $140.
With HomeAway shares surging even higher than the offer, Cowen & Co. analyst Kevin Kopelman said a competing bid was "not out of the question." He cited Priceline and Airbnb as potential suitors. A spokeswoman for Priceline, Expedia's biggest competitor in the online travel industry, didn't immediately respond to requests for comment.
Airbnb and other startups are changing the dynamics of the travel market by adding new capacity that competes with lodging operators and isn't directly searchable by websites such as Expedia. That's motivated them to respond by offering their own services that are based on people renting out their rooms and homes.
"It's clearly a product that's important for a certain group of people, so we will look to build out our rental product over time." Expedia Chief Executive Officer Dara Khosrowshahi told analysts on a conference call last week, during the company's most recent quarterly earnings report. "Incrementally, it will become a more important part of our mix next year and going into the following years."
Expedia has had a partnership with HomeAway for two years, Khosrowshahi said in Wednesday's statement. A year ago, the Bellevue, Washington-based company struck a deal to list 115,000 HomeAway vacation listings on its travel search engine.
Bringing HomeAway into Expedia's portfolio of brands "is a logical next step," Mr. Khosrowshahi said.
HomeAway, founded in 2005 and trading publicly since 2011, allows users to arrange vacation rentals at 1.2 million properties around the world. Its sales rose 12% to $130.7 million in the third quarter, while net income doubled to $10.4 million, the company reported Wednesday.
In recent years the company has made acquisitions that have amped up its competition with Airbnb. HomeAway sued San Francisco last year to overturn a law legalizing short-term rentals that, it said, favored Airbnb and discriminated against other tourist rental businesses.
~~ Bloomberg News