Online
travel agency Expedia to buy rival Orbitz for $1.38
billion
Send a link to a friend
[February 12, 2015]
By Sweta Singh and Ankit Ajmera
(Reuters) - Expedia Inc said it would buy
Orbitz Worldwide for about $1.38 billion in cash, its third acquisition
in four months, to take on larger rival Priceline Group Inc in a
burgeoning online travel industry.
|
Orbitz's shares shot up 20 percent to $11.63 in morning trading,
short of Expedia's offer of $12 per share. Expedia's shares rose
nearly 13 percent to $88.50. Priceline shares were up 2.8 percent.
While Priceline's market capitalization of about $55 billion is much
more than that of Expedia's and Orbitz's put together, Expedia only
recently slipped behind Priceline to become the world's
second-largest travel services company by bookings.
The possibility of antitrust issues was played down by Expedia's
Chief Financial Office Mark Okerstrom who said, "It is a $1.3
trillion industry and is highly fragmented ... We are only a small
player and our overall share is in single digits."
RBC Capital Markets analyst Mark Mahaney said regulatory hurdles
would not be significant, adding he believed Orbitz has been one of
the weakest players in the industry.
![](http://archives.lincolndailynews.com/2015/Feb/12/images/ads/current/pest_control_bch_092414.png)
Expedia, which owns Expedia.com, its flagship online travel agency
and hotel booking site Hotels.com, has expanded rapidly by buying
Travelocity last month and the Wotif Group in November.
"We are attracted to the Orbitz Worldwide business because of its
strong brands and impressive team," Dara Khosrowshahi, chief
executive of Expedia, said in a statement.
Orbitz, the operator of CheapTickets website, was exploring a sale
and had engaged a financial adviser to reach out to potential
buyers, Bloomberg reported last month.
[to top of second column] |
![](http://archives.lincolndailynews.com/2015/Feb/12/images/ads/current/bennett_lda_090314.png)
Expedia said it expects the Orbitz deal, which has an enterprise
value of $1.6 billion, to add 75 cents to earnings and generate cost
savings of $75 million.
The equity value of the deal is based on about 115 million Orbitz
shares outstanding as of Dec. 31.
Orbitz on Thursday also reported a 37 percent rise in quarterly
profit as gross bookings increased to $2.74 billion from $2.48
billion.
Orbitz' results come a day after TripAdvisor Inc, a travel review
website operator, also reported an increase in net income as leisure
and business travel increased in the United States.
(Editing by Savio D'Souza)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2015/Feb/12/images/ads/current/sunloan_bch_121614.png) |