Travelzoo Stock Up on Takeover Speculation

Investors moved into shares of Travelzoo Inc. as speculation heated up Thursday it might be the next Web site to be snapped up in the ongoing consolidation of online travel agencies.

The New York-based firm, which publishes sales and specials cultivated from hundreds of travel companies, is among the last remaining independent travel Web sites that are publicly traded. The field of potential takeover targets was reduced by one Tuesday after Travelocity owner Sabre Holdings Inc. agreed to buy British travel booking site Lastminute.com PLC in a $1.1 billion deal.

Shares of Travelzoo surged $3.18, or 11.5 percent, to $30.89 on heavy volume. The stock is trading some 70 percent below its 52-week high of $110.62 set last December.

There have been a number of merger and acquisition moves within the Internet travel industry during the past few years. Travel search engines and booking companies are vying to tap a burgeoning market: sales in the online travel space are seen growing to $71 billion by next year, up from $21 billion in 2001, according to Credit Suisse First Boston.

Among the most publicized acquisitors in the space is billionaire financier Barry Diller's IAC/InteractiveCorp, which has one-by-one bought travel-related sites such as Expedia, Hotels.com, and Hotwire. Cendant Corp., a conglomerate that operates everything from real estate companies to marketing firms, also has cobbled together a strong field of travel companies, including Orbitz and Cheap Tickets, as well as Britain's Ebookers.

Travelzoo might be among the last travel companies that equity investors can sink money into as most of its rivals are privately held. There are dozens of small online travel companies that have turned away from the stock markets, instead turning to private investors and venture capital firms.

SideStep Inc. raised about $17 million from Trident Capital in order to launch its services, while rival Mobissimo has raised cash from firms such as Cambrian Ventures. Kayak.com secured $7 million of financing from Sequoia Capital -- which was an early investor in technology bellwethers such as Google, Yahoo and Apple -- to help launch its travel Web site.

Cendant shares rose 28 cents to $20.48 in afternoon trading on the New York Stock Exchange. IAC/Interactive fell 13 cents to $22.83 on the Nasdaq.