Google, Amazon Are Potential Buyers for Deal Site Travelzoo

Travelzoo’s stock soared by nearly 30 percent today on news that the 14-year-old deals site is planning to sell itself.

Shares of the New York-based company gained $6 to close at $27.06 today after Reuters reported that the company was in the process of hiring a financial adviser after it received takeover interest from private equity firms.

Travelzoo spokeswoman Lisa Moore declined to comment on whether the company was for sale.

Travelzoo is one of the pioneers in the daily deals business. For more than a decade, it has been sending subscribers a weekly email highlighting what it calls the top 20 travel deals.

A list of obvious acquirers for Travelzoo includes Google, which famously failed to buy Groupon for $6 billion. More recently, Google bought travel company ITA Software. Amazon could also be interested as it pushes AmazonLocal, its daily deals business; however, it already owns a percentage of LivingSocial, the second-largest deals company after Groupon.

A host of other companies could also take a look at the deal, including its travel competitors, such as Expedia or Priceline, or several international providers.

Unlike Groupon, which takes a cut of the revenue when a deal is sold, Travelzoo uses an advertising model where companies pay a fee to get in front of its large email audience. More recently, the company shifted gears to enter the local deals space, offering discounts on restaurants and other local services. In those deals, it charges the merchant a percentage of each transaction.

Today, the company’s market value hovers around $300 million, falling way short of Groupon’s $9 billion valuation and making it a prime acquisition target.

The company’s main assets are its sales team and its list of subscribers, but generally, it is not known as a technology leader. The company’s Web site is still fairly basic with a red, white and blue theme and has very few pictures, which the company says is on purpose. Before any acquisition closes, the potential acquirer would want to know how much the two companies’ subscriber bases overlapped.

In 2011, the company reported revenues of $148 million, up from $112 million over the same period during the previous year.


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