Expedia acquires Travelocity in a $280 million cash deal

Expedia has acquired the online travel agency Travelocity from Sabre in a $280 million cash deal, the two companies announced on Friday. The acquisition is a move to strengthen Expedia’s presence in the online booking industry.

In 2013 the two companies made an agreement that allowed Travelocity to use Expedia’s technology powered platforms for its US and Canadian markets and drive additional traffic to Expedia.

The online booking market has experienced a lot of consolidation over the past year. Expedia’s main rival, Priceline, acquired the restaurant reservation website OpenTable in a full cash deal worth $2.6 billion last year.

S&P Capital IQ analyst Tuna Amobi, told CNBC:

“Given the success that they’ve had with integrating Travelocity into Brand Expedia (through the 2013 agreement), it’s a positive outcome,’’

According to Amobi, Travelocity is probably going to continue to operate as a unique brand under Expedia.

Expedia

Expedia currently dominates the online booking industry.

Expedia said that its air ticket volumes gained 29 percent in 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.’’

Expedia’s Chief Executive Officer Dara Khosrowshahi said in Friday’s news release:

“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,”

Sabre’s Chief Executive Officer Tom Klein said:

“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,’’

Expedia’s shares gained almost 2 percent on Friday. Sabre’s shares climbed by a bit over 1 percent.

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