Prosus to Acquire Latin American Travel Giant Despegar in $1.7B Strategic Deal

Posted by Admin December 23, 2024 Travel

Prosus has announced a definitive agreement to acquire Despegar (NYSE: DESP), Latin America’s leading Online Travel Agency, for US$1.7 billion at $19.50 per share, representing a 33% premium. The transaction, expected to close in Q2 2025, will expand Prosus’s Latin American ecosystem to serve over 100 million customers.

Despegar operates in 19 Latin American markets through B2C and B2B platforms, handling over 9.5 million transactions annually. The company generated $5.3 billion in gross bookings, $706 million in revenue, and $116 million in EBITDA for 2023. Prosus plans to create synergies between Despegar and its regional businesses, including iFood and Sympla, leveraging its consumer ecosystem to drive growth and enhance platform value.

Positive

Premium acquisition price of 33% over market value

Despegar’s strong financial performance: $5.3B gross bookings, $706M revenue

Profitable operations with $116M EBITDA in 2023

Market leadership in 19 Latin American countries

Potential synergies with Prosus’s existing regional businesses

Negative

High acquisition cost of $1.7B to be funded from cash resources

Extended closing timeline (Q2 2025) subject to regulatory approvals

Insights

This $1.7 billion acquisition represents a transformative deal in the Latin American online travel sector. The 33% premium over market price reflects Prosus’s strong conviction in Despegar’s strategic value and growth potential. With $5.3 billion in gross bookings and $116 million in EBITDA, Despegar’s financial metrics demonstrate robust operational efficiency and market leadership.

The integration potential with Prosus’s existing ecosystem, particularly iFood’s 60 million customer base, presents significant cross-selling opportunities and operational synergies. The transaction’s structure and timing align with market conditions, while the all-cash consideration funded from existing resources indicates Prosus’s strong financial position.

The strategic combination of Despegar’s AI-powered travel platform featuring Sofia (their AI assistant) with Prosus’s advanced AI capabilities signals a significant technological advancement opportunity. Despegar’s dual-model approach – B2C omnichannel platform and B2B white-label solutions – provides multiple growth vectors that can be enhanced through Prosus’s tech expertise.

The integration with Prosus’s regional ecosystem, particularly in mobile-first markets, could accelerate Despegar’s digital transformation and enhance user experience across its 19-market footprint. The potential for AI-driven personalization and cross-platform integration could create substantial competitive advantages in the regional OTA space.

This acquisition strategically positions Prosus to capitalize on Latin America’s growing digital travel market. The region’s expected 2-3% GDP growth, combined with increasing digital adoption, creates favorable conditions for online travel expansion. Despegar’s market leadership, with 9.5 million annual transactions and strong brand recognition, particularly in Brazil, provides Prosus with immediate scale and market dominance.

The deal’s timing coincides with post-pandemic travel recovery and digital acceleration in Latin America, suggesting potential for significant value creation through ecosystem integration and market consolidation.

12/23/2024 – 07:06 AM

AMSTERDAM & JOHANNESBURG, South Africa–(BUSINESS WIRE)–
Prosus, a global technology company, today announces that it has entered into a definitive agreement to acquire Despegar (NYSE: DESP) a leading Latin American Online Travel Agency (OTA), for $19.50 per share, equating to a 33% premium to the closing share price as of 20 December 2024, and a 34% premium to Despegar’s 90-day VWAP (volume weighted average price). The proposed transaction was approved by Despegar’s board of directors, who recommended that Despegar shareholders vote in favour of the proposed transaction following the unanimous recommendation by a transaction committee.

The transaction introduces a significant and compelling addition to Prosus’s Latin America ecosystem, which, post-transaction, will expand to serve over 100 million customers across local e-commerce, travel, and fintech sectors.

Fabricio Bloisi, CEO of Prosus Group said:

“This acquisition is a clear demonstration of our strategy to build value by creating a high-quality ecosystem of complementary businesses. Despegar is a highly profitable company, with an attractive market position, and an experienced management team – making it a natural addition to our presence in Latin America. We will accelerate Despegar’s growth by leveraging the extensive customer touchpoints within our portfolio, along with our operational expertise and advanced AI capabilities.”

Damián Scokin, CEO of Despegar said:

“This is an exciting development that delivers a great outcome for Despegar stakeholders. The transaction represents significant value for our stockholders, and I am convinced that Prosus is the ideal partner to drive our next phase of growth. For our customers, this means access to an expanded portfolio of services, better experiences, greater loyalty benefits and more complete solutions tailored to their needs. Prosus has a proven track record of building leading tech businesses across the world, and their deep understanding of the Latin American ecosystem uniquely positions them to drive our next phase of growth.”

Despegar operates in over 19 Latin American markets, serving customers through two primary business models: an omnichannel B2C platform that connects with users via the web, mobile app, and conversational channels powered by the company’s AI assistant, Sofia; and a rapidly expanding B2B segment that offers white-label solutions to partners such as banks, airlines, and retailers.

Over the past two decades, Despegar has developed and grown into a sector leader with a proven and scalable business model. The company handles over 9.5 million transactions annually, generating $5.3 billion in gross bookings, $706 million in revenue, and delivering a reported EBITDA of $116 million based on its full-year 2023 results.

Founded in Argentina in 1999, the business scaled and expanded throughout the region before listing on the New York Stock Exchange in 2017. Despegar has become the most recognised travel brand in Latin America and its Decolar brand is the most recognised brand in its largest market, Brazil.

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 to enhance the platform’s value proposition over time.

Through this acquisition, Prosus plans to create synergies between Despegar and its other regional businesses, such as iFood, Latin America’s leading food delivery platform with 60 million customers per year, and Sympla, a prominent events platform.

Fabricio Bloisi added:

“Latin America is a market we know and understand well, with real GDP growth of 2-3% expected next year and promising medium to long-term prospects. Coupled with that, online travel is expanding significantly around the world and the opportunities in the Latin America region give us confidence that we can work with Despegar to take the business to the next level. This investment will serve as a powerful example of how we can build value by integrating businesses into our ecosystem, driving growth, innovation, and lasting impact.”

The transaction has been entered into on terms and conditions customary for transaction of this nature, and is subject to the customary closing conditions, including approval by Despegar shareholders and the receipt of necessary regulatory approvals and is expected to close in Q2 2025. The purchase consideration will be funded from existing cash resources.

Morgan Stanley & Co. International PLC is serving as exclusive financial advisor to Prosus; Davis Polk is serving as legal counsel to Prosus. Goldman Sachs & Co. LLC is serving as exclusive financial advisor to the transaction committee; A&O Shearman is serving as legal counsel to Despegar.

Amsterdam, the Netherlands

23 December 2024

JSE sponsor to Prosus

Investec Bank Limited

About Prosus

Prosus is a global technology company, unlocking an AI-first world for our 2 billion customers. With investments in more than 100 companies across the world, we are building local ecommerce champions in growth markets.

With leading positions in Food Delivery, Classifieds and Fintech, Prosus has created its own unique technology ecosystem, driving innovation, knowledge sharing and growth across our portfolio.

Through the Prosus Ventures team, the group invests in new technology growth opportunities within AI, social and ecommerce platforms, fintech, B2B software, logistics, health, blockchain, agriculture and more.

The team actively backs exceptional entrepreneurs who are using technology to improve people’s everyday lives.

To find out more, please visit www.prosus.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241223169395/en/

Enquiries

Eoin Ryan

Head of Investor Relations

Tel: +1 347 210 4305

Email: eoin.ryan@prosus.com

Nicola McGowan

Chief Communications Officer

Tel: +44 7563 257 245

Email: nicola.mcgowan@prosus.com

Sibusiso Tshabalala

Head of Communications, South Africa

Tel: +27 81 431 4855

Email: sibusiso.tshabalala@naspers.com

Source: Prosus

FAQ

What is the acquisition price for Despegar (DESP) by Prosus?

Prosus is acquiring Despegar for US$1.7 billion, or $19.50 per share, representing a 33% premium to the closing share price as of December 20, 2024.

What are Despegar’s (DESP) key financial metrics for 2023?

In 2023, Despegar reported $5.3 billion in gross bookings, $706 million in revenue, and $116 million in EBITDA, processing over 9.5 million transactions.

When is the Prosus-Despegar (DESP) acquisition expected to close?

The acquisition is expected to close in Q2 2025, subject to shareholder approval and regulatory clearances.

How will the Prosus acquisition affect Despegar’s (DESP) operations?

Prosus plans to accelerate Despegar’s growth by integrating it with their Latin American ecosystem, leveraging customer touchpoints, operational expertise, and AI capabilities.

What is Despegar’s (DESP) current market presence in Latin America?

Despegar operates in 19 Latin American markets through B2C and B2B platforms, and is the most recognized travel brand in Latin America, with its Decolar brand being the most recognized in Brazil.