By Angela Chen
Expedia Inc. agreed to buy Orbitz Worldwide Inc. for about $1.34
billion, further consolidating the online travel industry.
Orbitz shareholders will receive $12 a share in cash, a 25%
premium over Wednesday's close. Orbitz shares surged 21% and last
traded above the offer price in August 2013. Expedia shares jumped
more than 13%.
Orbitz sells online travel services through its namesake site,
as well as ebookers.com and CheapTickets.com, among others.
Expedia, which was launched in 1996 by a small division within
Microsoft, went public in 1999 and has grown into a travel giant
with brands including Hotels.com, Hotwire, eLong Inc. and
Trivago.
Over the past year, Expedia has been buying more brands to add
new customers. The company in November closed a deal worth 703
million Australian dollars ($612 million) for Australia's Wotif
Holdings Ltd. In the U.S., the company recently agreed to buy Sabre
Corp.'s Travelocity brand for $280 million.
When asked last week by The Wall Street Journal about the
company's interest in adding Orbitz, Expedia Chief Financial
Officer Mark Okerstrom said the company was still working on
integrating the product of its latest shopping spree.
"We've got a track record of being an acquisitive company, but
we've got our hands full right now," he said.
With the Orbitz acquisition, Expedia would become the biggest
player in the travel retail area with a market share of over 6%,
according to information from Euromonitor International. This puts
it back in the lead, over rival Priceline.com Inc.
Expedia said the total enterprise value of the deal, which
includes the assumption of debt, is about $1.6 billion.
The travel industry is under pressure from new players,
including referral sites, such as Kayak and Hipmunk, that search
multiple sites and startups that offer unpublished discounts and
stays in apartments and spare rooms. Travel websites have responded
by offering more discounts and loyalty programs.
Orbitz, meanwhile, also reported Thursday that earnings grew 37%
in the fourth quarter as gross bookings rose 10% to $2.7 billion.
The company posted higher volume in hotel, air, car and vacation
packages, as well as higher average booking prices. Revenue from
hotel room nights improved 18%.
For its part, Expedia reported last week that its fourth-quarter
profit slipped as foreign exchange costs and ramped up spending in
China spoiled the online travel agent's holiday travel season.
Other names in the sector, like Priceline.com Inc. and
TripAdvisor Inc. also bounced on the news. Priceline edged up 2.6%,
and TripAdvisor, itself an Expedia spinoff, was up 19%. TripAdvisor
reported a bigger-than-expected surge in quarterly revenue after
Wednesday's closing bell.
Write to Angela Chen at angela.chen@dowjones.com
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