Uber has explored a bid to acquire Expedia

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Uber has explored a potential bid for Expedia, the $20 billion US travel booking site, in what would be by far the largest acquisition made by the ride-hailing company as it looks to further diversify and find new ways to grow.

Uber approached its advisers in recent months after a third party floated the idea of ​​acquiring Expedia to examine whether such a deal was possible and how it could be structured, according to three people familiar with the process.

Central to Uber's discussions has been the role of Uber CEO Dara Khosrowshahi, who served as Expedia's CEO from 2005 to 2017 and remains a non-executive director on its board. This makes it likely that any approach will be amicable and that he will distance himself from deal discussions.

People briefed on the matter cautioned that Uber's interest was at a very early stage and it was possible a deal would not be reached. No formal approach to Expedia has been taken and there are no current discussions, one of the people said.

Khosrowshahi is a protégé of Barry Diller, the serial dealmaker who serves as CEO of Expedia. The Uber chief worked at Diller's IAC Internet and Media group for seven years and called him “a great mentor of mine.”

Uber, Expedia and Dealer declined to comment. Following the Financial Times report, Expedia shares rose 3.8 percent on Thursday, while Uber shares fell 2 percent.

In recent years, Uber has expanded from its roots in ride-hailing into train and flight bookings, food delivery, corporate logistics, and advertising, as it seeks to transform itself into a “super app” closer to the multi-purpose platforms created by Chinese tech groups like WeChat. .

“Anywhere you want to go in your city and anything you want to get, we want to enable you to do that,” Khosrowshahi told the Financial Times this week.

The addition of Expedia and its booking technology would further spur those ambitions. The fourth-largest online travel company generated revenue of $12.8 billion for 2023 amid a post-pandemic tourism boom, but warned this summer that it was facing a slowdown in travel demand.

Uber's M&A power has been boosted by an 85 percent increase in its stock over the past year, giving it a market value of $173 billion. In February, the San Francisco-based company reported its first year of operating profitability, driven by growing demand for its ride-hailing services along with food delivery, logistics and its fast-growing advertising arm.

Uber's “top priority” for deploying capital is investing in growth, including through acquisitions, Chief Financial Officer Prashanth Mahendra Raja said in August.

Expedia's shares have risen more than 50 percent in the past year, but they represent only a tenth the size of its potential suitor, with a market capitalization of just under $20 billion.

Uber has made a few big deals since going public in 2019. It expanded into food and beverage delivery by acquiring Postmate for $2.65 billion and Drizly for $1.1 billion, and entered the shipping and logistics business with its $2.25 billion purchase of Transplace And it was a huge success. A $3.1 billion deal for Careem for passenger transportation services in the Middle East.

The company also has stakes in self-driving car company Aurora and Chinese ride-hailing group DiDi, and recently struck partnerships with Google's Waymo self-driving taxi service and GM's Cruise company.

In August, Uber received its first investment-grade credit rating. Executives were keen to ensure that any bid for Expedia would not result in a downgrade back to the junk category, two people familiar with its interest said.

At Expedia, Khosrowshahi became one of the highest-paid executives in America. Uber compensated him for the $160 million in options he gave up when leaving Expedia, with options attached to him, increasing his new employer's valuation to $120 billion and staying on for five years.

Uber's stock fell immediately after its listing but has since risen, bringing the value of Khosrowshahi's options to about $136 million by the end of February. Shares have since risen another 23 percent.