For about a month now, rumors have been circulating that Google, the monster web search company, and also the company that allows me to host this blog (they own blogger.com), may be on the prowl to swallow up Expedia.com.
Today, though these rumors have picked up steam. Neither company has returned calls from the top news organizations, but the stock of both Expedia, (EXPE) and Google (GOOG) have gone up considerably. Would this acquisition on Google's part make sense?
Yes! Expedia which currently has a market cap of $2.24 Billion could probably be acquired by Google for around $3 billion, give or take a couple hundred million dollars. Expedia finds the best travel deals on anything from hotels, to airfare, to rental cars, to Cruises, and to travel activities. Their service really is top of the line. Take it from someone who just purchased airline tickets from them a few months back at a rate, which in my opinion was phenominal. Google could take the current setup and work it into their search results. So if someone was to search for "cheap airfare from newyork to La" the Expedia prices would quickly pop up in the actual search results without you even having to visit their site. This is a sure advantage for Google who would be takign advantage of Economies of scope. The two companies are sure complements to one another, and any regulatory concerns will not be a factor. Will the deal go through? I certainly think we will be hearing more about this possible acquisition in the days and weeks ahead. With market values for companies way down, it is an ideal time for larger companies to shop aroudn for cheap acquisitions. Note that Expedia stock is currently trading at about a 70% discount from last years highs.
Feel free to discuss this possible acquisition as well as other stock topics in the Day Trading Forum at Talkgold.
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2 comments:
I agree with your assessment that EXPE is an ideal company for GOOG to acquire. I do disagree with your price however. If this deal happens I would expect it to be closer to $4.5B or about $16/shr. I don't see how EXPE shareholders would benefit with a +/-$3B (~$10/shr) bid. GOOG has plenty of cash ~$16B to do this deal and personally I feel that even at $4.5B bid GOOG would still be getting a deal on EXPE.
are you guys kidding me.....expedia is not an ideal company for google. and expedia is far from a company that finds great deals.....1st off. I operate a OTA and expedia runs on worldspan which is a general GDS so my site also finds the exact deals expedia has, just as well as priceline and orbitz wich also you worldspan as one of their search sources.
2nd...expedia hotels are 100% based on hotels.com which are contracted hotels otherwise they sell you rack rates..so they are not always the cheapest...they have just spent so many dollars to brainwash you to think this.
I as a consolidator can outprice ANY OTA on ethnic airfare like brazil, argentina, asia, africe ect...just like any other consolidator can becuase we have contracts they will never have since airlines dont hand over contracts to companies that will sell them milliones regardless.
2) google is a search company and maybe you are not aware that Travel is top search driven industry on the internet so...if google buys expedia.....do you think it may cuase a bit of an issue with travelocity, orbitz,priceline and a few others that pay millions to google adwords. hello! yahoo tried to mix air searches by the purchase of farechase dispite the realtionship with travelocity to power the travel section and now guess what...farechase is gone!
So dont believe the hype....now may google invest in expedia take a part and try to incorporate expedia as a marketing source....would make more sense then to assume they are in it to sell tickets.
do some homework before assuming about industries that have no true relation.
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