VacationSpot.com and Rent-a-Holiday were both on-line travel companies that focused on the independent leisure lodging segment of the travel market. VacationSpot.com company comes from Seattle, Washington while Rent-a-holiday comes from other side of western world Brussels, Belgium. Both companies started at around same time and in April 1999 they entered formal merge negotiations.
In march of 1998 the CEO and president of VacationSpot.com Murch was contacted by the CEO of Rent-a-holiday Coppieters. Later Murch offered his partner the merge. First Coppieters did not want to hear anything about it but in April 1999 he and his partner Ingelbrecht sat on the plane to Seattle to talk about the merge. The discussion was very worth, both companies felt like they belong to each other and they have a lot to offer to the other side and much to earn from this merge. The talks lasted for two days. The first day was mostly about companies policies, strategies and the reasons why these companies should merge. Everything looked well until the price of the contract was said. Price of the merge was presented by the VacationSpot.com representatives at 9:1 ratio which means that VacationSpot.com would pay $ 27 million and Rent-a-Holiday would take part in the merge with $ 2 – 3 million. Rent-a-Holiday executives were also offered a long term employment contract in the merge.
After this price was presented the executives of Rent-a-Holiday walked out in anger saying that these talks was nothing more then wasting of their time.
The main problem was about the price ratio of the merge. Rent-a-Holiday executives felt like their company was lower-priced. According to their position in the market they expected to receive more valuable offer. The company from their point of view as they both were the founders of Rent-a-Holiday deserved more then 9:1 ratio. They also took this offer very personally expecting that Rent-a-Holiday should play stronger part in this merge. They were also little offended by the offer of long-term employment contract.
On the other hand the executives of VacationSpot.com felt like the price ratio presented at the talks was just a starting point for the rest of the talks from where they expected to move on. The problem from their point of view was that they felt Rent-a-Holiday executives like they want to move the price ratio to disadvantageous point for VacationSpot.com and take part in the merge with even lower price then 9:1 ratio. They were sure that 9:1 ratio is the lowest they could offer. They also offered the long-term contract to Rent-a-Holiday executives because VacationSpot.com as a company wanted to make a stronger presence in Europe where these people would be really worth to have.
Rent-a-Holiday ends these talks with walk out and they were preparing to catch the plane to Brussels the other day. They felt like they could do the business from then on without the merge with Europe strategy and compete against VacationSpot.com effectively if they enter European market without them.
VacationSpot.com definitely wants to resolve that misunderstanding because they need to have stronger presence in Europe. But they are afraid of European market according to experiences which found a lot of cultural problem in Europe they could not resolve. That is the reason why they are looking for a strong European partner. Rent-a-Holiday is a company they found interesting because they use a new translation engine which is supposed to become a strong weapon. They are sure that they want to continue with the talks and find an agreement with Rent-a-Holiday.
Founding and Strategy
Murch and Slyngstad established the company in September 1997. Its strategy was built on these three foundations – building a comprehensive property offering, superior reservation technology and a strong distribution system. In February next year VacationSpot.com was announced and launched....