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Photo illustration by Monica Nickelsburg.
Photo illustration by Monica Nickelsburg

Expedia just finalized its acquisition of HomeAway, meaning the online travel giant is now officially going head-to-head with Airbnb.

The blockbuster deal, which is Expedia’s largest ever at $3.9 billion, is the company’s way of establishing a beachhead in the so-called “sharing economy.” While Expedia and Priceline have continued to duke it out over traditional hotel bookings for the past several years, a new breed of competitors crept up with a way to let homeowners rent out their own spare bedrooms.

Expedia CEO Dara
Expedia CEO Dara Khosrowshahi.

These alternative accommodations have become increasingly popular among budget-conscious travelers, and Expedia has — for the most part — found itself watching from the sideline.

But not anymore.

“We are thrilled to enter the fast-growing, ~$100 billion alternative accommodations space with HomeAway on our side,” Expedia CEO Dara Khosrowshahi said in a press release announcing the acquisition’s closing. “We couldn’t be more excited about the opportunity to create even more robust experiences for our shared global traveler audience and for HomeAway’s homeowners and property managers all around the world.”

Expedia completed the deal with $1 billion is in cash and the remaining $2.9 billion is stock, paying a 19 percent premium on HomeAway’s value at the time the deal was announced.

HomeAway was founded in 2005, IPO’d in 2011 and today runs several sites including VRBO.com and VacationRentals.com.

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