By Angela Chen, Wall Street Journal
Expedia Inc. agreed to buy Orbitz Worldwide Inc. for about $1.3 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 premarket to $11.84 and last traded above the offer price in August 2013. Expedia shares edged up 4%.
Orbitz sells online travel services through its namesake site, as well as ebookers.com and CheapTickets.com, among others.
Expedia, for its part, has spent the past year buying brands in an effort 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.
Launched in 1996 by a small division within Microsoft Corp. , Expedia went public in 1999 and has since grown into a travel giant. Among the brands in its portfolio are Hotels.com, Hotwire, eLong Inc. and Trivago.
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new players, including referral sites, such as Kayak and Hipmunk, that search multiple sites and startups that offer unpublished discounts and stays in apartments and spare rooms.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.
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.
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