Expedia to acquire vacation-rental company HomeAway for $3.9 bn

Expedia has bolstered its push to become a one-stop hub for everything to do with travel and vacations as it gears up to buy out vacation-rental company HomeAway.

The $3.9-billion deal would further consolidate an industry which is fast becoming highly competitive.

Expedia had always looked to entice customers with a range of offerings, including Orbitz, Travelocity and Cheap Tickets.

Austin, Texas-based HomeAway has over 1 million paid listings focused sharply on the beach and ski set. It had been facing an increasingly competitive landscape in the urban rentals market against Airbnb, which boasted 2 million plus listings in over 190 countries and had been valued at over $20 billion.

In a statement, Expedia CEO Dara Khosrowshahi, said the move to buy HomeAway is a "logical next step" to its current relationship with the company as it moved to  bulk up its alternative vacation rentals business.

HomeAway had planned shifting its business model toward online booking ahead of the deal with Expedia, as it looked to better compete against rivals including Airbnb and Priceline's Booking.com.

It now planned to charge a traveler service fee which could add about 6 per cent to most deals, though it would be based on a sliding scale.

HomeAway shares zoomed as much as 27 per cent after Expedia agreed to acquire the vacation-rental company on speculation that the bid might prompt a counteroffer from another rival such as Priceline Group.

Expedia will pay $38.31 a share for HomeAway, the companies said in a statement following closing of trading on Wednesday, which was 20 per cent higher than Austin, Texas-based HomeAway's price before the announcement of the deal. Expedia shares gained 4.4 per cent to $140.

With HomeAway shares soaring even higher than the offer, Cowen & Co analyst Kevin Kopelman said a competing bid was "not out of the question," adage.com reported.

According to Kopleman Priceline and Airbnb could be potential suitors.