Building a "super app"? Uber reportedly considers acquiring the travel website Expedia

Uber is looking to diversify its development and find new growth paths by considering acquiring the American travel booking website Expedia.

On Thursday, October 17th, according to the Financial Times citing sources, Uber has been in contact with advisors in recent months to explore the idea of acquiring Expedia and evaluate the feasibility of this transaction. One of the key points of discussion for Uber is the role that Uber's current CEO Dara Khosrowshahi should play in this transaction. Khosrowshahi served as CEO of Expedia from 2005 to 2017 and is currently a non-executive director on Expedia's board.

If successful in acquiring this nearly $20 billion travel website, this deal would be Uber's largest transaction. However, sources caution that Uber's interest in acquiring Expedia is still in a very early stage, with no formal contact with Expedia or related discussions taking place, so this acquisition may not materialize.

In August, Uber received its first investment-grade credit rating. Two sources stated that management is very keen for Uber's proposed acquisition of Expedia not to result in Uber's credit rating falling back to junk status.

At the time of writing, Expedia's stock price rose over 6% in pre-market trading, while Uber fell nearly 3%.

Uber is exploring diversification

In recent years, Uber's business scope has expanded from ride-hailing to train and flight booking, food delivery, corporate logistics, advertising, etc., aiming to transform itself into a "super app" like WeChat. Acquiring Expedia and its booking technology will greatly propel Uber towards this ambition. Uber CFO Prashanth Mahendra-Rajah stated in August that Uber's "primary task" in deploying capital is to invest in growth businesses, including through acquisitions.

Over the past year, Uber's stock price has risen by 85%, reaching a market value of $173 billion, enhancing Uber's M&A capabilities. According to Uber's operational profit report in February this year, Uber's high profitability benefited from the market's recovery in demand for ride-hailing services, as well as its food delivery, logistics, and rapidly growing advertising business.

Since going public in 2019, Uber has acquired the food delivery service company Postmates for $2.65 billion, the alcohol online ordering and transaction platform Drizly for $1.1 billion, entering the food and beverage delivery market; the logistics company Transplace for $225 million, entering the freight and logistics market; and the Middle Eastern ride-hailing software Careem for $3.1 billion. Uber also owns stakes in the self-driving car company Aurora and the Chinese ride-hailing group Didi, and recently partnered with Google's Waymo autonomous taxi service On the other hand, as the fourth largest online travel company, Expedia's stock has risen by nearly 50% in the past year, but its market value is only below $20 billion, about one-tenth of Uber's. Expedia benefited from the recovery of the tourism industry after the epidemic last year, with revenue reaching as high as $12.8 billion. However, Expedia warned in the summer that travel demand this year may slow down.