Expedia to buy Orbitz for $1.6B
NASDAQ-listed Expedia, Inc is acquiring Orbitz Worldwide, Inc, a rival online travel service provider at an enterprise value of $1.6 billion including around $260 million debt, in a move which would arguably push it just marginally ahead of arch rival Priceline as the top player in the industry.
The deal comes just weeks after Expedia acquired Travelocity from Sabre Corporation for $280 million in cash.
NYSE-listed Orbitz operates the consumer travel planning sites including Orbitz (orbitz.com), ebookers (ebookers.com), HotelClub (hotelclub.com) and CheapTickets (cheaptickets.com). Also within the Orbitz Worldwide family, Orbitz Partner Network (orbitzpartnernetwork.com) delivers private label travel technology solutions to a broad range of partners including some of the world`s largest airlines, bank loyalty programs and travel agencies, and Orbitz for Business (orbitzforbusiness.com) delivers managed travel solutions for companies of all sizes.
Expedia would pay Orbitz shareholders $12 per share in cash, a premium of approximately 29 per cent over the volume weighted average share price for the five trading days up to and including February 11, 2015.
The boards 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 Orbitz board received a fairness option from Qatalyst Partners and has recommended that its stockholders vote in favour 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 travellers all over the world," said Dara Khosrowshahi, president and CEO, Expedia, Inc.
"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, CEO, Orbitz Worldwide.
Expedia is one of the world's largest travel companies, with an extensive brand portfolio that includes leading online travel brands, such as OTA Expedia.com (with localised sites in 31 countries), Hotels.com (along with localised sites in 60 markets), discount travel site Hotwire, corporate travel management firm Egencia besides properties such as Venere, eLong, trivago and CarRentals.com.
The acquisition doesn't change the strategy in India for Expedia, where it already runs its flagship brand as also some other properties. Expedia runs a separate India site with local currency payment option. Orbitz, on the other hand, does offer bookings for hotels as well as domestic flights within India but is targeted at an international customer base with dollar denominated payments.
The fast growing but crowded OTA business in India is dominated by home-grown majors like NASDAQ-listed MakeMyTrip, Yatra, Cleartrip, Goibibo and Via. Expedia is the most prominent foreign player active in India.