Investors and Wall Street have been speculating for quite some time that Tripadvisor Inc (NASDAQ: TRIP) is destined to be sold to a larger travel peer. But each
time this rumor presents itself TripAdvisor remains a standalone company — but this time around its different, according to
Gadfly's
Gillian Tan.
TripAdvisor is now "laying the groundwork" to sell itself based on a notable change to its executive-severance policy, Tan
suggested. Specifically, the company's new compensation policy better remunerates executives whose job would be in jeopardy through
a change-in-control event, including a merger or acquisition.
Executives who are dismissed within three months of a proposed change or within the 12 months after the change they will also
receive a payout equivalent to 12 to 24 months of their base salary plus a bonus.
In other words, TripAdvisor's executives will be better rewarded financially if they remain with the company should the company
be integrated with a peer, or be heavily compensated if they are let go, Tan explained.
Meanwhile, TripAdvisor remains an attractive takeover candidate given its 415 million average unique monthly visitors. This is
particularly attractive to an internet giant like Facebook Inc (NASDAQ: FB) looking to expand its presence in the online travel industry. Interested parties
who took a look at TripAdvisor a year ago may have shrugged at the $9 billion valuation, but today the company is worth a more
attractive $5.7 billion.
At the same time TripAdvisor's $5.7 billion valuation "isn't exactly cheap" with an
enterprise value-to-Ebitda multiple of 15.2x, Tan noted. This would mark a premium versus the two most logical buyers, Expedia
Inc (NASDAQ: EXPE) and Priceline Group Inc
(NASDAQ: PCLN).
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