Uber Explores Potential Takeover of Expedia, Shares Surge

Expedia Shares Surge on Takeover News

Shares of Expedia Group experienced a surge in premarket trading in New York following a report from the Financial Times. The report suggested that Uber Technologies has been consulting with advisors over the past few months to explore a potential takeover of the travel website. Wall Street analysts have viewed the potential merger between the ride-hailing giant and the travel website as a positive move.

Uber's Approach to Expedia

The Financial Times report cites three individuals familiar with the talks between Uber and advisors. According to these sources, Uber approached advisors after the idea of an Expedia acquisition was suggested by a third party. The aim was to examine whether such a deal would be feasible and how it could be structured.

Uber CEO's Involvement

The report also highlighted that Uber's chief executive, Dara Khosrowshahi, who served as Expedia's CEO from 2005 to 2017 and remains a non-executive director on its board, may suggest that any deal would be 'friendly' rather than hostile. However, it was also stated that Uber's discussions with advisors to determine how a deal could be structured with the travel website was still in the very early stages, and it was possible that a deal would not transpire. It was also noted that Uber and Expedia have yet to formally discuss any deal.

Uber's Expansion Plans

Earlier this week, Uber CEO Dara Khosrowshahi stated, "Anywhere you want to go in your city and anything that you want to get, we want to empower you to do so." Combining ride-hailing services with Expedia and its booking technology under one platform would create a 'super app' similar to those built by Chinese tech firms. In August, Uber CEO Prashanth Mahendra-Rajah stated that the ride-hailing firm's "top priority" for deploying capital was investing in growth, including via acquisitions.

Market Reactions

In the markets, Uber shares fell about 3% in premarket trading, while Expedia shares were up about 6%. Analysts provided commentary on the Financial Times report. They suggested that Uber CEO Dara Khosrowshahi's familiarity with Expedia as its former leader could help drive revenue and cost synergies. However, they also noted that an acquisition of Expedia would come with the challenges of managing Expedia's existing brand portfolio in the face of difficult competition.

Uber's Expansion History

Since 2019, Uber has expanded into food and beverage delivery, freight, and logistics, yet it has made very few large deals.

Bottom Line

While the potential merger between Uber and Expedia is still in its early stages, it's clear that the move could have significant implications for both companies. Uber's expansion into the travel booking sector could create a 'super app' and drive growth. However, the challenges of managing Expedia's existing brand portfolio in the face of stiff competition cannot be overlooked. What are your thoughts on this potential merger? Do you think it would be a positive move for both companies? Share your thoughts and don't forget to sign up for the Daily Briefing, which is available every day at 6pm.