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Shareholders of Latin American online travel company Despegar.com (DESP +32%) got a stocking stuffer this holiday season. Prosus, an e-commerce-based technology company, announced it will acquire DESP for $19.50 per share, all in cash for an enterprise value of approximately $1.7 bln. That represents a 33% premium from Friday's close. DESP's board has approved the transaction and the deal is expected to close 2Q25.

• Despegar has some attractive features. It operates in over 19 Latin American markets, serving customers through two primary business models: an omnichannel B2C platform and a rapidly expanding B2B segment that offers services to partners such as banks, airlines, and retailers. Despegar has grown into a leading position in the Latin American online travel space. It handles over 9.5 mln transactions annually, generating $5.3 bln in gross bookings and $706 mln in revenue.
• An attractive feature of DESP is that it recently achieved two significant milestones in Q3: a new 10-year Lodging Outsourcing Agreement with Expedia starting in 2025, which will expand DESP's lodging supply; second, DESP announced improvements in its AI travel assistant, Sofia, into an SaaS offering. This would open up opportunities for Despegar to leverage its AI technology beyond its own platform, allowing partners to integrate SOFIA into their platforms. DESP expects it become a growing source of recurring revenue.
• Prosus sees significant potential in leveraging its extensive consumer ecosystem in the region to drive user growth and engagement on Despegar, while introducing new products and services. Prosus plans to create synergies between Despegar and its other regional businesses, such as iFood, Latin America's largest food delivery platform with 60 mln customers per year, and Sympla, a prominent events platform.
• Despegar recently reported impressive Q3 results. Revenue grew just 8.9% yr/yr, however, that was 53% growth on an FX neutral basis to $193.9 mln. DESP said it focused on profitability in key markets such as Brazil (its largest and most important market) and it benefitted from a notable demand recovery in Argentina. As a result, adjusted EBITDA jumped 94% yr/yr to $48.0 mln, representing an all-time high margin of 24.8%. Despite FX challenges, DESP said that demand remains strong across the region.

Overall, we think the 33% premium is attractive for DESP investors and we can see why Prosus would find DESP attractve. The company has been seeing a recovery in travel demand in Latin America in recent quarters. The recent Expedia lodging deal was a big positive and the leveraging of its Sofia AI technology to integrate into other platforms was a win as well. Prosus clearly saw some value here, given the stock recent pullback in recent weeks.