In a recent development, Uber has considered a potential bid for Expedia, a U.S. travel booking website valued at nearly $20 billion, marking what would be the largest acquisition for the ride-hailing giant as it seeks further diversification and growth opportunities. According to three individuals close to the matter, Uber has engaged advisers after the concept of acquiring Expedia was suggested by a third party to assess the feasibility and potential structuring of such a transaction.
A central topic in Uber’s discussions is the involvement of its CEO, Dara Khosrowshahi, who previously served as Expedia’s CEO from 2005 to 2017 and continues to be a non-executive director on its board. This background suggests that any potential offer would likely be amicable, with Khosrowshahi expected to abstain from deal negotiations.
Those informed about the situation have noted that Uber’s interest is still at an initial stage, and there is the possibility that no agreement will materialize. One source emphasized that no formal proposal has been made to Expedia, and no discussions are currently underway.
Khosrowshahi is a protégé of Barry Diller, Expedia’s executive chair and a noted dealmaker. Khosrowshahi worked under Diller’s internet and media group IAC for seven years and regards him as an influential mentor.
Neither Uber, Expedia, nor Diller have provided comments on the matter. Following a report from the Financial Times, Expedia’s shares rose by 7.6% in after-hours trading, while Uber’s shares saw a decrease of almost 2.7%.
Uber has broadened its horizons beyond ride-hailing in recent years, venturing into train and flight bookings, food delivery, corporate logistics, and advertising, aiming to evolve into a “super app” similar to Chinese platforms like WeChat. Khosrowshahi recently told the Financial Times, “Anywhere you want to go in your city and anything that you want to get, we want to empower you to do so.”
Acquiring Expedia and its booking technology could accelerate those ambitions. Expedia, the fourth-largest online travel company, generated $12.8 billion in revenue in 2023 amidst a tourism recovery but warned of a potential slowdown in travel demand this summer.
Uber’s capacity for mergers and acquisitions has been bolstered by an 85% increase in its stock over the past year, resulting in a market value of $173 billion. In February, Uber reported its first year of operating profitability, driven by revived demand for ride-hailing alongside its food delivery, logistics, and rapidly expanding advertising segment.
Chief Financial Officer Prashanth Mahendra-Rajah stated in August that Uber’s “top priority” for deploying capital was investing in growth through potential acquisitions. Meanwhile, Expedia’s stock has increased by over 50% in the last year, but it remains significantly smaller than Uber, with a market valuation just below $20 billion.
Since going public in 2019, Uber has engaged in a few large deals, including acquisitions of Postmates for $2.65 billion, Drizly for $1.1 billion, Transplace for $2.25 billion, and Careem for $3.1 billion. The company also holds stakes in the self-driving car firm Aurora and Chinese ride-hailing group DiDi, and recently formed partnerships with Waymo’s autonomous taxi service by Google and GM’s Cruise.
In August, Uber achieved its first investment-grade credit rating. Executives are mindful to ensure any potential bid for Expedia wouldn’t result in a reversion to a lesser credit standing.
During his tenure at Expedia, Khosrowshahi became one of America’s highest-paid executives. Upon joining Uber, the company compensated him for relinquishing $160 million in options from Expedia with options linked to Uber’s valuation reaching $120 billion and his commitment to remain for five years. Uber’s stock initially declined after its listing but has since surged, elevating the value of Khosrowshahi’s options to approximately $136 million by February’s end, with an additional 23% rise in share price since.
