Expedia has agreed to acquire online holiday home rental company HomeAway in a $3.9 billion deal.
On Tuesday, the online travel booking giant said the agreed acquisition, which includes all of HomeAway's brands and assets, will go ahead for approximately $3.9 billion in cash and Expedia common stock, based on a HomeAway share price of $38.31.
Under the terms of the deal, Expedia will offer to acquire each outstanding share of common stock of HomeAway in exchange for $10.15 in cash and 0.2065 of a share in Expedia stock.
HomeAway caters for customers across the globe who wish to rent holiday homes rather than book a hotel for their vacation. While you cannot currently book homes directly on the website -- with most transactions taking place between customers and homeowners after connecting -- this is due to change in the future.
The company launched in 2006 with 60,000 holiday homes in 90 countries and now supports over one million listings in 190 countries. In 2013, homeowners and property managers earned over $11 billion in rental revenue and over 144 million nights were booked by customers.
The acquisition of the vacation rental service could assist Expedia in fighting against competition such as Airbnb. The startup, currently embroiled in a legislative row in San Fransisco over how many days a homeowner can offer a property considering the city's housing crisis -- nonetheless is rising as a popular method for homeowners to generate a profit. Airbnb is now valued at roughly $24 billion.
Once HomeAway switches to a booking model, the firm will be able to better compete with Airbnb which uses this structure to turn a profit.
Dara Khosrowshahi, CEO of Expedia said:
"We have long had our eyes on the fast growing ~$100 billion alternative accommodations space and have been building on our partnership with HomeAway, a global leader in vacation rentals, for two years.
Bringing HomeAway into the Expedia, Inc. family and adding its leading brands to our portfolio of the most trusted brands in travel is a logical next step. [...] We look forward to partnering with them to accelerate their shift from a classified marketplace to an online, transactional model."
Unanimously approved by both companies boards of directors, the transaction is expected to close in the first quarter of 2016. The buyout is the latest in a run of acquisitions. Last year, Expedia shelled out approximately $1.6 billion in snapping up Orbitz Worldwide and Travelocity.
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