Cheapflights owner heads for £150m sale after Expedia approach

Momondo Group, the owner of UK travel website Cheapflights, is exploring a sale of the business after receiving buyout approaches from several parties.

The company, which was started as an attic-based operation in 1996, has hired advisors at corporate finance boutique Arma Partners to look at strategic options for the business.

A deal could value the company at around £150m.

It is thought that around six offers have been made by private equity firms and trade buyers, believed to include Expedia and Travelocity owner Sabre.

Cheapflights was started by travel journalist John Hatt before Hugo Burge and former ABN Amro banker David Soskin led a buyout of the business in 2000.

The investment led to the company growing from a three-person classified advertising website to become a rare British dotcom success when it launched in the US three years later.

Mr Burge and Mr Soskin’s investment vehicle, HOWZAT Partners, also sold rival meta-search business Trivago to American giant Exedia for €477m last year after being an early-stage investor.

Cheapflights pulled a planned flotation in 2008 during weakening market conditions.

Cheapflights acquired Danish “meta-search” tech firm Momondo in 2011, which has led to a huge growth in its international business under a rebranded Momondo Group.

Mr Burge is chief executive of the group, while Mr Soskin has stepped back from the business but still retains an equity stake.

Meta-search engines have transformed the travel industry as they enable users to swiftly trawl airline websites and online travel agencies for the best price.

The industry shake-up has already led to a spate of dealmaking in the sector, with Priceline’s $1.8bn acquisition of Kayak last year while Google’s acquisition of travel information business ITA software for $700m was cleared in 2011.

Momondo generated revenues of £43.3m for 2013, while it reported a 20pc increase to £14.5m for the first quarter of this year.

The business also reported £3.2m of earnings before interest, tax, depreciation and amortisation. The group’s overseas business now generates 84pc of the revenues, with 40pc of visits to its Cheapflights site from mobile devices.

A spokesman said “Momondo received a number of proactive approaches from interested parties about the possibility of investing in the business in the second half of 2013, prior to the Group releasing its sales and first quarter results.”

“Momondo Group can confirm that, in the light of the earlier approaches in the latter part of 2013, it has appointed Arma Partners as advisors to look at strategic options for the business as it drives forward the next stage of its growth strategy.”

The company has over 19m visits from holidaymakers to its websites from 30 countries.