Tripadvisor announced Monday that it was forming a special committee made up of independent directors of its board to review a potential acquisition by Liberty TripAdvisor Holdings, part of the Liberty Media empire run by Greg Maffei, which has long held a controlling stake in the travel company currently valued at $3.1 billion.
Tripadvisor is contemplating a buyout by its largest investor. Image source: Getty Images
Shares of Tripadvisor jumped 15.8% after the market closed on Monday following the announcement; by Tuesday afternoon the stock price had dipped slightly but remained up 14.6% compared to where it was at Monday’s closing bell.
In a Schedule 13D filing with the Securities and Exchange Commission on February 9, Liberty TripAdvisor Holdings said it was in discussions over an all-cash offer to buy Tripadvisor’s outstanding shares. Liberty TripAdvisor already owns 29.2 million shares, or 21.1%, of Tripadvisor stock, currently valued at roughly $743 million. It also controls 56.9% of Tripadvisor shareholder voting power, according to the same SEC filing.
Tripadvisor is made up of three main businesses. First, there’s the core Tripadvisor travel-review site, which brought in $813 million in revenue in the first three quarters of 2023 with an average EBITDA margin of 34%—a measure of the company’s operating profit. Next is Viator, the world’s largest online marketplace for booking tours and activities, and attractions, which reported revenues of $576 million in the first nine months of 2023. Third, TheFork is the leading European restaurant-booking app, with revenues of $115 million earned January through September of 2023.
While Tripadvisor is the best-known brand of the three, Viator has been the fastest-growing segment of the business in recent years. A Liberty Tripadvisor presentation to investors last November described Viator as having “massive TAM,” or Total Addressable Market, referring to the maximum potential revenue a company can generate. A graphic in the same presentation valued the market for global experiences at $280 billion, noting that Viator accounted for $3.3 billion—just over 1%—of that pie.
In March 2020, Liberty TripAdvisor Holdings landed a $325 million investment from Certares Management, which has invested in more than three dozen companies in the travel sector, including American Express Global Business Travel, Hertz Global Holdings and LATAM Airlines. Certares’ founder and senior managing director Greg O’Hara sits on the Tripadvisor board.
For its part, Liberty Media is currently the world’s most valuable sports empire as the owner of Formula 1 racing. It also owns 84% of Sirius XM, 30% in Live Nation as well as smaller stakes in many other sports and entertainment companies.
Neither Tripadvisor nor Liberty TripAdvisor Holdings responded to Forbes’ requests for comment.
Tripadvisor will release its Q4 and full-year 2023 financial results on Wednesday after the closing bell.
This article was first published on forbes.com and all figures are in USD.
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