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Airbnb IPO may boost HomeAway’s takeover appeal

HomeAway’s (AWAY) better than expected quarter may make the owner of VRBO.com and BedandBreakfast.com even more attractive to potential suitors, especially as rival Airbnb prepares for what could be one of the year’s biggest initial public offerings. “Everybody understands that the company trades at a discount to its industry and something's gotta happen one way or another.” predicts Leigh Drogen, CEO, of Estimize, which tracks corporate estimates from the independent and buyside community.

Related: Estimize.com data on HomeAway

HomeAway’s market cap sits around $3 billion, well below rival TripAdvisor’s (TRIP) $12.7 billion. It also dwarfs Airbnb’s estimated market cap of around $20 to $25 billion. “HomeAway at $3 billion is a much smaller subset of that, but it fits really well into something like Priceline (PCLN),” notes Drogen who also sees Expedia’s (EXPE) $1.6B acquisition of Orbitz (OWW) announced this month prompting more deals. “This industry is getting consolidated.”

Related: Expedia To Acquire Orbitz Worldwide For $12 Per Share In Cash


HomeAway’s low valuation is being complemented by what was a better than expected fourth quarter reported on Tuesday. Revenues jumped 21.5% from the year-ago period to nearly $110 million and net income of $15.2 million, or $0.16 per diluted share. Management did caution that the strengthening U.S. dollar may cut full year revenue by $30 million. Despite the tepid outlook, shares of HomeAway have gained over 20% this month, but are still off 29% over the past 12-months.

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On the earnings conference call, Wall Street analysts did not directly ask CEO Brian Sharples whether the company was a takeover target however he did offer this update on the company’s partnerships in Europe according to the call transcript:

We are in negotiations with a lot of other distribution partners a couple of them have been now acquired by Expedia. So those discussions that used to take place with a couple of third parties are now taking place with Expedia. And then we have some relationships that we’re looking at over in Europe as well, nothing to announce yet, but we still feel very positive on the opportunity. - HomeAway CEO Brian Sharples

HomeAway and Priceline had not yet responded to a request for comment at the time of publication.