* Growth in Europe seen in 2013
* Expedia can buy remaining shares in coming years
* Possibility of spinoff raised
By Karen Jacobs
Dec 21 Expedia Inc said on Friday it
would acquire a 61.6 percent equity stake in trivago, a German
search engine that focuses on hotels, for roughly $632 million
in cash and common stock, a move that will expand Expedia's
Expedia, whose brands include Hotwire and Hotels.com, said
trivago, which allows consumers to search for price and room
availability, has doubled revenue each year since 2008 and
currently expects about 100 million euros (about $132 million)
in net revenue for 2012. Trivago features search results from
more than 600,000 hotels over 140 booking sites in more than 30
The transaction includes provisions for Expedia to acquire
remaining trivago shares at fair market value shortly after the
third- and fifth-year anniversaries of the closing date, Expedia
said during a conference call.
Expedia raised the possibility that it might spin off
trivago in coming years to expand shareholder value, the
approach that it took with TripAdvisor, the online
research company that was spun off in late 2011.
"Five years from now, might we spin off trivago? If it
increases shareholder value and we're confident that it does, we
might," Expedia Chief Executive Dara Khosrowshahi said on the
He added that trivago, which is visited by 20 million people
monthly, was one of the fastest-growing channels from which
Expedia is garnering an increasing amount of traffic. Still,
Expedia will continue to invest in Google Inc and
TripAdvisor, he said.
"We are seeing our European business get more healthy and
we're quite confident of our growth in Europe going into 2013,"
Khosrowshahi said. "We just think that trivago ... adds even
more fuel to the fire, so to speak."
The Expedia deal is expected to close in the 2013 first half,
subject to approval from competition authorities. Expedia said
it expects the purchase to add to per-share profit excluding
items next year.
The acquisition "probably gives them some additional
marketing opportunities," said Michael Millman of Millman
Millman added the Expedia purchase was "consistent" with
Priceline.com Inc's move last month to expand its
online travel research and advertising capabilities by
announcing an acquisition of Kayak Software Corp.
The management team of trivago is expected to continue to
operate independently from Germany after the acquisition closes.
Shares of Expedia, which competes with Priceline and Orbitz
Worldwide Inc, were down about 2.3 percent at $59.51 on
Friday afternoon amid a broader market sell-off.