Expedia (NASDAQ:EXPE) rose in pre-market on Thursday, a day after the world's largest online travel agency by bookings agreed to buy vacation rental site HomeAway (NASDAQ:AWAY) for about $3.9bn in cash and stock.
Shares of Bellevue, Nebraska-based Expedia advanced as much as 3.5% to $138.85 as of 8:12 a.m. in New York. Shares of Austin, Texas HomeAway surged 22% to $32.04.
Expedia is paying $38.31 per share, the companies said in a statement. That’s 20% above HomeAway’s price at the close on Wednesday.
The purchase would help Expedia fend off competition from apartment-sharing startup Airbnb Inc.
Airbnb and other startups are changing the dynamics of the travel market by adding new capacity that grapples with lodging operators and isn’t directly searchable by travel web sites such as Expedia.
Expedia said It anticipates the takeover will hurt its earnings per share next year but boost results in the long run.
HomeAway was founded in 2005 and trading publicly since 2011. It allows users to arrange vacation rentals at 1.2mln properties around the world. Its sales rose 12% to $130.7mln in the third quarter, while net income doubled to $10.4mln.
The deal is expected to close in the first quarter of 2016.