Expedia Inc acquires Travelocity in $280 million deal

[January 24, 2015]  By Jeffrey Dastin
 
 (Reuters) - Expedia Inc <EXPE.O> has acquired online travel agency Travelocity from technology company Sabre Corp <SABR.O> for $280 million in cash, the companies said in a statement on Friday, as consolidation in the online booking industry continues.

The deal follows a 2013 marketing agreement in which Expedia Inc's technology powered platforms for Travelocity's U.S. and Canadian websites, while Travelocity drove additional web traffic to Expedia.

The merger marks further consolidation in the online booking space, which has seen a number of acquisitions from Expedia Inc's main competitor, The Priceline Group <PCLN.O>, including its $2.6 billion takeover of restaurant reservation website OpenTable last year.

"Given the success that they've had with integrating Travelocity into Brand Expedia (through the 2013 agreement), it's a positive outcome," said S&P Capital IQ analyst Tuna Amobi.
 

Expedia Inc, which owns brands ranging from the website that carries its name to Hotels.com and China's eLong, said in its October quarterly filing that its air ticket volumes grew 29 percent for the first three quarters of 2014, "primarily due to volume driven by Brand Expedia's agreement with Travelocity along with ongoing improvements for the Brand Expedia sites themselves."

"Evolving this relationship strengthens the Expedia Inc family's ability to continue to innovate and deliver the very best travel experiences to the widest set of travelers, all over the world," Expedia Inc's Chief Executive Officer Dara Khosrowshahi said in Friday's news release.

Travelocity is likely to maintain its unique brand within the umbrella of Expedia Inc, according to Amobi.

Sabre Corp's Chief Executive Officer Tom Klein said the company's primary focus remains to be the providing of "mission-critical software solutions" to its global travel customers.

"We have had a long and fruitful partnership with Expedia, most recently by partnering to strengthen the Travelocity business, so our decision to divest Travelocity is a logical next step for us both," he said in the statement.

Expedia Inc's shares rose 3.14 percent Friday to trade at $88.40, while Sabre Corp's shares gained 1.81 percent to trade at $20.85.

(Reporting by Jeffrey Dastin in New York; Editing by Alan Crosby)

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