Skift Take

Expedia's purchase price for a majority stake in SilverRail was double the sum that SilverRail had raised from investors. The price tag was a multiple of the investment but not a stellar exit for shareholders.

In May, Expedia said it would acquire the train-service distributor SilverRail Technologies.

Expedia has since revealed in a financial filing its purchase price for taking a majority stake in the London-based vendor of rail retailing and distribution platforms.

The deal cost Expedia $148 million — of which the company paid $138 million in cash.

Expedia’s purchase price for a majority stake would be a multiple of the more than $70 million in funding that SilverRail raised, but it does not appear to be a stellar exit for investors. That’s especially true for the investors from its latest round in 2014, which had been led by Mithril Capital Management. As Skift has noted, SilverRail had raised the more than $70 million in funding from venture firms such as Canaan Partners, Sutter Hill Ventures, and Brook Venture Partners.

Yet the deal had merits. There were likely few other possible takers.

Expedia’s Rail Rollout

The relationship between Expedia and SilverRail began with a commercial partnership in 2010 via Expedia’s corporate travel brand Egencia.

But the relationship deepened in 2016 when the U.S.-based online travel giant contracted with SilverRail to help sell train tickets on, the company’s site for UK-based travelers. Since then, Expedia expanded the sale of rail bookings to its German customers.

Expedia doesn’t plan to add a U.S. rail booking option this year. But it does intend to make booking passenger train service available globally over time. Its goal is to cross-sell rail tickets when customers are searching for international flights or hotel stays, not just to offer rail as a separate item to book. The integration effort has been led so far by Greg Schulze, the company’s Singapore-based senior vice president of global tour and transport.

What did the deal bring Expedia? Its international train ticket-booking service is now powered by SilverRail, which crunches the data on rail schedules and systems across multiple train operators. SilverRail has the data thanks to commercial deals with bureaucratic, tough-to-negotiate-with, state-owned railways.

Other Players

Rail is one of the fastest-growing travel sectors in Europe and parts of Asia, but Expedia and its rivals Priceline Group and Ctrip have largely ignored international rail ticket sales to date. Ctrip does, though, sell Chinese domestic rail.

Other companies have attempted to sell rail tickets internationally.

Most prominently, there is UK-based Trainline, which recently bought its upstart French rival Captain Train, which has since been folded into the parent brand.

Meanwhile, Voyages-SNCF — the France-based booking platform that is half-owned by Expedia — bought Loco2, a UK-based consumer marketplace for train tickets. Other players include France’s Kelbillet, Railteam, and RailEurope, owned by France’s state railway SNCF and by Swiss Federal Railways. Also in the mix is Israel-based Save a Train, the Australian startup Rome2Rio (which, in turn, uses SilverRail for some of its services), and the metasearch site GoEuro. State-owned German operator Deutsche Bahn has been rumored to be piloting more international sales efforts.

SilverRail also provides operations software as a vendor to 1,500 railway companies, online marketplaces, and other transport companies. It claims that its tools will power one billion rail searches and more than 25 million transactions this year.

On this front, Madrid-based tech giant Amadeus has attempted to build a business-to-business services counterpart to SilverRail but has not had as much market traction as SilverRail globally. Perhaps in a sign of how things are going there, Amadeus’s leader of its rail business, Thomas Drexler, joined SilverRail in May as an executive.

In Hanover, Germany, HaCon provides a journey planner tool to railway companies like Deutsche Bahn. HaCon says its tools are used to plan 40 million journeys a day.

It is unclear if SilverRail will continue to fully pursue the business-to-business services in the long run under its new Expedia ownership despite SilverRail’s comments that it intends to do so.

The deal had been championed by Expedia CEO Dara Khosrowshahi, who is now apparently leaving the company. That change in leadership may — or may not — eventually prompt a re-evaluation of the rail effort.

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Tags: expedia, mergers and acquisitions, rail, silverrail

Photo credit: London's Javelin rail service to the southwest of England starts at King's Cross St. Pancras station in London (shown). Expedia aims to make booking seats on such trains more widely available worldwide. Sean O'Neill

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