Expedia is extending its grip on the global online travel booking market by buying US rival Orbitz for $1.4bn.
The acquisition of Orbitz, which owns ebookers.com and CheapTickets.com, comes just a month after Expedia bought Travelocity for $280m and Australia’s Wotif for A$703m ($612m). Expedia’s portfolio already contains nearly a dozen well-known brands, including Hotels.com and Hotwire.
Expedia’s chief financial officer, Mark Okerstrom, said buying up other websites was the only way the company could avoid being overtaken by rivals like Google and TripAdvisor. Expedia was recently overtaken as the world’s largest travel booking company by Priceline – which owns Priceline.com, Booking.com, Kayak and OpenTable. Google is also investing resources in beefing up its travel offerings.
Okerstrom said it was unlikely that the deal, which requires shareholder approval, would be blocked by regulators. “It is a $1.3tn industry and is highly fragmented,” he said on a conference call with journalists and analysts on Thursday. “We are only a small player and our overall share is in single digits.”
Daniel Kurnos, an analyst at Benchmark, said the deal would allow Expedia, which began life as a division of Microsoft in 1996 but is now a listed company with a market value of nearly $10bn, to “remain an 800lb gorilla in the industry”.
Kurnos said the proposed deal would also allow Expedia to save a lot of money while serving many more customers.
Expedia’s chief executive, Dara Khosrowshahi, said the company was “attracted to the Orbitz Worldwide business because of its strong brands and impressive team”.
“We believe Orbitz can add to scale and add to our ability to run a more efficient machine,” he said.
Expedia’s $12-a-share offer represents a 25% premium above Orbitz’s share closing price of of $9.62 on Wednesday. Orbitz’s shares had jumped 21% to $11.65 by 11.30am on Thursday. Expedia’s shares were up 16% to $90.75.
