Investing.com -- Uber Technologies (NYSE:UBER) has explored a possible offer for $20 billion US online travel booking firm Expedia (NASDAQ:EXPE) as the ride-hailing giant looks for new sources of growth, according to the Financial Times.
Citing people familiar with the situation, the FT said Uber has approached its advisers in recent months about making a bid for Expedia. The move was spurred by a third party who broached the idea of examining if such a deal would be possible and how it could be structured, the paper added.
A key focal point of the discussions was Uber CEO Dara Khosrowshahi, the FT reported. Prior to joining Uber, he helmed Expedia from 2005 to 2017 and remains a non-executive board member of the group, meaning that an approach would likely be friendly and that he could recuse himself from conversations around a potential deal, the FT said.
Uber's interest is in a very early stage and it is still possible a deal will not come to pass, the FT said, adding that no formal bid has been made and the talks are not currently ongoing.
Shares in Expedia jumped on the news, while Uber's stock price declined.
In a note to clients, analysts at Truist said they are skeptical "as to viability of such a transaction for Uber", arguing that it would not be in line with the company's stated goal of using mergers to drive growth.
"Expedia's current and projected growth rate is materially below that of Uber's," the analysts flagged.
Meanwhile, analysts at Bernstein said the report "surprised" them because they had anticipated that Uber would expand its operations into travel via partnerships "and not outright M&A".
"With a $20 billion market cap, an acquisition of Expedia would be the largest deal for the company, which has historically done smaller deals for adjacent delivery assets and/or found ways to simplify its footprint globally by exiting or consolidating international mobility and delivery markets," the Bernstein analysts wrote.