Expedia Inc. (NASDAQ:EXPE) has acquired online travel agency Travelocity from Sabre Corporation (NASDAQ:SABR) for $280 million in cash, the companies announced Friday. The move comes 18 months after a partnership between the two companies that outsourced Travelocity's back-end technology to Expedia in exchange for 50 percent of Travelocity's revenue.
“Travelocity is one of the most recognized travel brands in North America, offering thousands of travel destinations to more than 20 million travelers per month,” said Expedia CEO Dara Khosrowshahi in a statement. “The strategic marketing agreement we’ve had in place has been a marriage of Travelocity’s strong brand with our best-in-class booking platform, supply base and customer service. 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.”
The deal was not unexpected by analysts and industry watchers, given the revenue-sharing partnership that was already in place since August 2013. Two weeks ago, the Federal Trade Commission posted an an early termination notice of a merger notifcation request regarding Expedia Inc. potentially acquiring Travelocity.com LP from Sabre Corporation.
The sale allows Sabre to focus on its back-end systems that sell airline tickets and hotel rooms, reports the Associated Press. In a statement, Sabre CEO Tom Klein said, “Our primary focus at Sabre is to provide mission-critical software solutions to our global airline, hospitality and travel agency customers -- and to help them support their customers every day ... our decision to divest Travelocity is a logical next step for us both.”
With the addition of Travelocity, Expedia's growing portfolio of travel sites that includes Hotels.com and Hotwire poises the company better to battle with rival Priceline Group Inc. (NASDAQ:PCLN), which recently bought Kayak.com.
Expedia's shares rose $2.91, to $87.24 from Friday morning's lower open at $84.33 (Thursday's close: 85.71). Sabre's shares fell by $0.08, to $20.47 from Friday morning's higher open at $20.55 (Thursday's close: $20.48).