Expedia Inc said on Friday it would acquire a 61.6 percent equity stake in trivago, a German search engine that focuses on hotels, for roughly $632 million in cash and common stock, a move that will expand Expedia's European reach.

Expedia, whose brands include Hotwire and Hotels.com, said trivago, which allows consumers to search for price and room availability, has doubled revenue each year since 2008 and currently expects about 100 million euros (about $132 million) in net revenue for 2012. Trivago features search results from more than 600,000 hotels over 140 booking sites in more than 30 countries as per a Reuters report.

The transaction includes provisions for Expedia to acquire remaining trivago shares at fair market value shortly after the third- and fifth-year anniversaries of the closing date, Expedia said during a conference call.

Expedia raised the possibility that it might spin off trivago in coming years to expand shareholder value, the approach that it took with TripAdvisor, the online research company that was spun off in late 2011.

"Five years from now, might we spin off trivago? If it increases shareholder value and we're confident that it does, we might," Expedia Chief Executive Dara Khosrowshahi said on the conference call.

He added that trivago, which is visited by 20 million people monthly, was one of the fastest-growing channels from which Expedia is garnering an increasing amount of traffic. Still, Expedia will continue to invest in Google Inc and TripAdvisor, he said.

"We are seeing our European business get more healthy and we're quite confident of our growth in Europe going into 2013," Khosrowshahi said. "We just think that trivago ... adds even more fuel to the fire, so to speak."

The Expedia deal is expected to close in the 2013 first half, subject to approval from competition authorities. Expedia said it expects the purchase to add to per-share profit excluding items next year.

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