Expedia Plans to Spin Off TravelAdvisor

(Expedia.com)

Expedia (NASDAQ:EXPE) plans on spinning off its TripAdvisor business, boosting shares by more than 12%.

The discount travel company’s board of directors agreed to a tax-free plan that would split Expedia into two separate companies, according to a release.  TripAdvisor Media Group owns a portfolio of 18 companies that would become part of the TripAdvisor entity. Expedia would retain control of several major brands including Hotels.com and Hotwire.

The popular TripAdvisor Web site helps travelers plan vacations and aggregates reviews from contributors. It has been a major contributor to Expedia’s bottom-line.  While Expedia shares soared shortly after the announcement, analysts that follow the company have offered mixed reviews of the move.

“The announcement would allow investors to value the companies separately, potentially unlocking the value in TripAdvisor,” wrote analysts at Bank of America/Merrill Lynch in a research note.

However, the analysts noted losing TripAdvisor “exposes Expedia’s slow growth.” Bank of America and Stifel Nicolaus upgraded the company’s rating, but analysts at Morgan Keegan saw the spinoff adversely affecting Expedia’s profts.

The deal is still contingent upon final board approval and potentially shareholder approval, the release said.