On Tuesday, the TripAdvisor stock creates significant attention amongst stock market investors. Speculation about a takeover of the US travel portal has driven the share price up. The heavily indebted company announced on Monday evening that it has convened a special committee to review potential business proposals. With this announcement, TripAdvisor signals its willingness to evaluate strategic options.
The Special Committee consists of independent members of the TripAdvisor Board of Directors and is tasked with "evaluating all proposals submitted for a potential transaction, and all alternatives thereto with respect to the company".
As support for the evaluation process, the independent investment banking firm Centerview Partners LLC was engaged as financial advisor. The potential proposals also include the recently announced intention of Liberty TripAdvisor Holdings Inc. to explore possible alternatives for LTRP and Tripadvisor.
The company emphasized, however, that there is no guarantee for a transaction and the special committee has not made any decisions yet. A potential acquisition is subject to further reviews and requires the approval of both the executive board and the special committee.
The initial analyst reactions to the current situation were mostly positive. According to Wells Fargo analyst Brian Fitzgerald, private equity funds (PE) could have significant interest in purchasing TripAdvisor. He considers a valuation of 25 to 28 US dollars per share to be realistic.
Fitzgerald assumes that a PE fund that owns a portfolio of various assets and has a plan for value enhancement is most likely to be interested in an acquisition.
Cowen analyst Kevin Kopelman also sees it similarly, expecting a valuation of $25 per share. Due to regulatory pressure, Kopelman finds it unlikely that major travel industry players such as Airbnb, Booking Holdings, or Expedia will secure the acquisition candidate TripAdvisor.
A Takeover by a PE Fund Appears More Likely to Him. So far, the takeover speculations are pure conjecture. Nevertheless, investors were thrilled by the announcement of the special committee. After-hours, the shares of the travel portal rose by 13 percent, seemingly making up for the persistent downward trend of recent years.
This positive trend continued into Tuesday as well. At the NASDAQ technology exchange, TripAdvisor's stock ultimately closed 13.81 percent higher at a price of $25.46. With this, the price is already close to the takeover value estimated by analysts Fitzgerald and Kopelman.
Whether the Rise in Share Prices Will Last Remains to Be Seen. On Wednesday, TripAdvisor Will Present the Financial Results for the Fourth Quarter and the Full Year of 2023. According to "Investopedia", Analysts Expect the Company to Report Earnings of $0.07 Per Share, Compared to $0.04 Per Share in the Same Quarter of the Previous Year.
