Citi 'surprised' that Uber would want to acquire Expedia

Investing.com -- Citi analysts expressed surprise regarding news that Uber Technologies (NYSE:UBER ) might explore an acquisition of Expedia (NASDAQ:EXPE ), following a report by the Financial Times on potential merger discussions.

Although both companies declined to comment, Citi weighed in, stating that the move would be unexpected as Expedia is still completing its turnaround.

"We would be somewhat surprised to see Uber acquire Expedia," Citi wrote but acknowledged that such a deal could fit into Uber's strategy of developing a super-app that integrates multiple services like rides, food delivery, goods, and travel experiences.

The report highlighted that Uber's CEO, Dara Khosrowshahi, previously led Expedia and continues to serve on its board, which adds further context to the rumor.

While an acquisition could expand Uber's offerings, Citi emphasized that Uber already has multiple growth avenues ahead.

"We believe Uber has multiple levers of growth, including new mobility modalities (like hailables, moto, and reserve), grocery and autonomous vehicles (AVs)," the analysts noted.

Travel remains a key component for Uber, as airport rides account for about 15% of its Mobility gross bookings, says the bank.

However, Citi suggested that Uber is likely to stay focused on its core business rather than pursue acquisitions in the travel sector.

Citi stated: "We believe Uber is likely more focused on its core growth drivers and we would take advantage of any dislocation in shares."

While Uber's acquisition of Expedia could align with its ambition to diversify, Citi analysts believe the company is more focused on driving growth through its existing business lines and platforms.

Source: Investing.com