Travelzoo Looks to Sell Itself
It was revealed on Wednesday that Travelzoo (NASDAQ: TZOO), is seeking to sell itself. The internet company which provides travel deals on flights, hotels, vacation packages and cruises, has stated that it is going through a "quiet period", and it is now in the process of looking for a financial advisor.
TZOO declined to comment when contacted by Benzinga, so it appears that they weren't kidding when they referred to a quiet period. Still, the market value of the company is a cool 336.1 million, so one would imagine that it would be an attractive proposition for someone.
Following the news, TZOO shares shot up 24% to $26.12 in premarket trading. That might sound like good news, but in fact the company's shares have dropped over 70% since this time last year, when seemingly every web-based company with a known name was the subject of a massive media buzz after Groupon (NASDAQ: GRPN) had announced that it was planning its initial public offering.
Much like many other web-based companies, Travelzoo's income comes from advertising revenue and partnerships. However, consumers don't actually book their trips through TZOO and for that reason it is facing increasingly intense competition from rivals like Priceline.com (NASDAQ: PCLN) and Expedia (NASDAQ: EXPE). In terms of local deals, it is competing with Groupon (NASDAQ: GRPN).
With 24 million subscribers in North America, Europe and Asia-Pacific, the fact that Travelzoo does currently have a depressed stock price should attract a few sharks. The company has a built-in subscriber base, and it is growing 10 to 15% and, with GRPN having so much success with getaway deals, it makes sense for one of the bug guns to acquire Travelzoo.
It will be fascinating to see who eventually gets Travelzoo but whoever it is will be getting a solid brand with a lot of existing customers. With a big-money mega company behind it, the sky would really be the limit.