Hemrajani notes that on Thursday the FTC posted on its website that it has granted an Early Termination notice to Sabre Corp SABR 1.55% and Expedia on their Hart Scott Rodino (HSR) filing with the acquired entity being Travelocity. The analyst adds that barring any press releases from either company, “we can only opine on the probability that Expedia is in the process of acquiring the entire Travelocity asset.”
Shares of Expedia are Outperform rated with a $92 price target, while shares of Sabre are also Outperform rated with a $22 price target.
Expedia currently has a 50 percent revenue share agreement with Sabre relating to Travelocity with Expedia having completed integration of Travelocity with its back-end systems in the first quarter and Sabre handling the sales and marketing aspect.
The analyst states that if an acquisition were to happen, it will be a positive development for both firms. On the one hand, it will help Travelocity deliver its balance sheet further and takes a non-core asset out of focus. On the other hand, Expedia will gain further market share in the U.S. and four more quarters of inorganic boost to its revenue growth.
Image credit: Sporst, Flickr
Latest Ratings for EXPE
|Nov 2014||Credit Suisse||Initiates Coverage on||Neutral|
|Oct 2014||Credit Suisse||Maintains||Neutral|