PitchBook November 08, 2015
Expedia (NASDAQ: EXPE) is making its second massive acquisition of 2015, this time purchasing vacation rental marketplace HomeAway (NASDAQ: AWAY) for an equity value of about $3.9 billion; its $1.3 billion buy of rival Orbitz was completed in September. The price represents a roughly 20% premium to HomeAway’s listing price, consisting of $38.31 per share in cash and Expedia common stock. In an SEC filing of a conference call related to the deal, Expedia president Dara Khosrowshahi stated that HomeAway “will be centrally run out of Austin on a standalone basis,” or, in other words, operating more as another platform in the Expedia arsenal.
By adding HomeAway, Expedia will have plenty of ammunition to take on Airbnb and potentially edge out Priceline, integrating around 1 million rental listings in over 190 countries worldwide into its core business model of full-service travel bookings. The timing of the announcement highlights how much value HomeAway could bring to Expedia, given it comes just a week after HomeAway expanded its offering in Asia by strategically partnering with travelmob, and comes just days after Airbnb won a small battle against short-term rental opponents when San Francisco’s Proposition F, which would have restricted the services, was voted down in the local election.
Founded in 2005, HomeAway immediately caught investors’ attention, raising roughly $400 million in equity financing in just under four years. It grabbed a post-money valuation of $1.67 billion with its $250 million round in late 2008, according to the PitchBook Platform. HomeAway's growth only continued through its IPO in 2011, which produced a market cap of $3 billion at the time. The company’s offering is similar to Airbnb—which currently has a private valuation of $25.5 billion—allowing users to explore, reserve and pay for vacation rental listings. HomeAway’s VC backing came from firms like Redpoint Ventures, Austin Ventures, Institutional Venture Partners and Technology Crossover Ventures, all of which held on to at least an 8% stake post-IPO (Austin Ventures kept a 22.4% stake). The acquisition, if completed, will mark a lucrative exit for any VCs that held on to equity, especially Austin Ventures and Redpoint, which first invested in HomeAway’s $40 million Series A in February 2005 at a $53 million post valuation.