Prosus, the tech conglomerate controlled by Naspers, is set to acquire Despegar, one of the largest online travel agencies in Latin America, for $1.7 billion. The deal, which has been approved by Despegar's board of directors, is expected to close in Q2 of 2025, pending a shareholder vote.

The acquisition is a strategic move by Prosus to expand its presence in the Latin American market, where GDP is expected to grow 2-3% next year. By acquiring Despegar, Prosus aims to leverage the company's existing customer base and operations to achieve greater economies of scale in the region. Despegar, which operates in 19 markets across Latin America, will join Prosus's portfolio of companies, including food delivery platform iFood and Sympla, a ticketing platform similar to Ticketmaster.

Despegar's management team, led by CEO Damián Scokin, will continue to operate the company, which is expected to benefit from Prosus's investment and expertise. The deal is seen as a positive outcome for Despegar, which has struggled to grow in recent years amidst economic, social, and public health turmoil in the region.

The acquisition price of $19.50 per share represents a 33% premium on Despegar's market capitalization of $1.24 billion as of last Friday. While this is a decent outcome for Despegar's shareholders, it's worth noting that the company's market capitalization on its first day of public trading in 2017 was higher than the acquisition price.

For Prosus, the deal marks a significant expansion of its operations in Latin America, where it already has a strong presence through its existing businesses. The company's CEO, Fabricio Bloisi, stated that the acquisition is a "clear demonstration of our strategy to build value by creating a high-quality ecosystem of complementary businesses."

The deal is the latest in a series of investments in travel and tourism technology, highlighting the growing interest in the sector. Last week, Hostaway, a software company serving the private short-term rental market, raised $365 million in funding led by General Atlantic. General Atlantic, incidentally, was once an investor in Despegar when it was a private company.

Despegar, founded in 1999, is one of the older and more established online travel brands in the market. The company has worked to keep up with the times, developing a conversational chatbot called Sofia and offering both direct-to-consumer and white-label services to banks, airlines, and other retailers selling travel services to their customers.

According to its full-year 2023 results, Despegar sees approximately 9.5 million transactions annually, generating $5.3 billion in gross bookings, $706 million in revenue, and EBITDA of $116 million. The company's operations will continue to be led by its existing management team, which is expected to benefit from Prosus's investment and expertise.

The deal is a significant development in the travel technology sector, highlighting the growing interest in Latin America as a key market for growth. As the region's economy continues to expand, companies like Prosus and Despegar are well-positioned to capitalize on the opportunities presented by the growing demand for travel and tourism services.