Expedia to buy rival Orbitz for $1.33 billion (+video)
Expedia announced Thursday that it would buy rival online travel site Orbitz for about $1.33 billion, further consolidating the travel booking industry. Shares of Orbitz are up more than 23 percent in premarket trading and Expedia is up 5 percent on the announcement.
It's Expedia's second major deal in the past month as the industry consolidates. Expedia announced the $280 million acquisition of another rival, Travelocity, in late January.
Expedia, based in Bellevue, Washington, will pay $12 per share, a 25 percent premium to the Orbitz' closing price of $9.62 Wednesday.
The full announcement from Orbitz is below:
Expedia, Inc. (Nasdaq:EXPE) announced it has entered into a definitive agreement under which it will acquire Orbitz Worldwide, Inc. (NYSE:OWW), including all of Orbitz Worldwide's brands, for $12.00 per share in cash, representing an enterprise value of approximately $1.6 billion, and a premium of approximately 29% over the volume weighted average share price for the five trading days up to and including February 11, 2015.
The Boards of Directors of both companies have approved the transaction, which is subject to approval by the shareholders of a majority of Orbitz Worldwide's common stock and other customary closing conditions, including applicable regulatory approvals. The Board of Directors of Orbitz Worldwide received a fairness opinion from Qatalyst Partners and has recommended that its stockholders vote in favor of the merger.
"We are attracted to the Orbitz Worldwide business because of its strong brands and impressive team. This acquisition will allow us to deliver best-in-class experiences to an even wider set of travelers all over the world," said Dara Khosrowshahi, President and Chief Executive Officer, Expedia, Inc. "From the flagship Orbitz.com brand, to other well-known consumer brands such as CheapTickets, ebookers and HotelClub and the business-to-business brands Orbitz Partner Network and Orbitz for Business, theOrbitz Worldwide team has built a devoted customer base and we look forward to welcoming them to the Expedia, Inc. family."
"Our mission at Orbitz Worldwide has been to build our brands to be the world's most rewarding places to plan and purchase travel," said Barney Harford, Chief Executive Officer, Orbitz Worldwide. "We're excited for Orbitz Worldwide to join the Expedia, Inc. family and for our teams to work together to further enhance the offerings we provide to our customers and partners."
The boards of both companies have approved the deal, but it still requires a nod from Orbitz shareholders.
Orbitz had said in January that it was considering selling itself.
Shares of Orbitz Worldwide Inc., based in Chicago, are up more than 23 percent in premarket trading and Expedia is up 5 percent.
The other big travel booking company is the Priceline Group, which owns sites like Priceline, Booking.com, Kayak and OpenTable. Priceline's stock rose 1.8 percent to $1,078.89 in premarket trading.
While those companies dominate the travel market — and are taking advantage of quickly-growing markets in developing countries — they are facing new pressures at home from more-innovative sites like airfare search Hipmunk and last-minute deal site HotelTonight.