Who Will Buy Travelzoo?

Posted by · April 11, 2012 3:39 pm

After watching its stock value plummet 75 percent since last July, travel deal site Travelzoo is planning to sell itself. This news comes from a new report from Reuters, which cites three internal sources, noting that the company is currently looking for a financial advisor. The sources say that the site’s decision was spurred by the company’s receipt of takeover interest from private equity firms and trade buyers.

Responding to the news quite favorably, the travel site’s stock soared nearly 30 percent Wednesday morning.

Commenting on the news, research analyst Dan Kurnos, of The Benchmark Company, said that whoever ultimately acquires Travelzoo will be “getting a business that is probably growing 10 percent to 15 percent even in challenging economic times.” Kurnos showed no real concern about the travel site being able to find a buyer, adding, “It makes sense for them to be acquired by somebody, especially given the success that Groupon has had with gateways.”

Groupon, as many will recall, was at one point going to go to Google for an impressive $6 billion, but ultimately fell through back in December 2010.

What makes Groupon and Travelzoo different, however, is that while Groupon collects revenue for each deal it sells—and it’s not off to the greatest start as public company, I should note—Travelzoo embraced an advertising model in which companies are charged for placement in front of the site’s audience of more than 24 million subscribers. By adding a local focus recently, the site has also begun receiving increased revenues by taking a cut of the deals local merchants choose to offer.

Nevertheless, Groupon’s staggering valuation of $9 billion still towers over that of Travelzoo, which rests at a more modest $300 million.

That said, it’s still anybody’s guess as to who will seize the opportunity to lay hold of Travelzoo’s coveted sales team and subscriber list. While Google and Amazon top the list of notable potential buyers, other companies interested in the deal include ODIGEO—a subsidiary of AXA Private Equity—as well as Permira.

Google, which already owns travel software company ITA Software, may be interested in further strengthening this part of its business, suggests Tricia Duryee of AllThingsD.  Similarly situated, Amazon, which already owns a percentage of LivingSocial, may be interested in using Travelzoo’s assets to bolster its AmazonLocal offering.

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