March 16--Chicago-based Orbitz Worldwide talked with more than a dozen companies about an acquisition before agreeing last month to sell itself to Expedia in a deal that, if completed, will reap a $20 million payday for its CEO, according to a regulatory filing Monday.
Orbitz CEO Barney Harford stands to earn a severance package worth $19.7 million as a result of the company's acquisition by Expedia, according to the filing. About $3.5 million is in salary and bonus, and more than $16 million is in stock. Chief Financial Officer Michael Randolfi, Chief Technology Officer Roger Liew and Orbitz.com President Samuel Fulton will receive packages worth about $4 million each.
The filing details acquisition negotiations of varying seriousness since summer 2013 with 15 companies in addition to Expedia, which was brought into the process in December. The other companies were not named but included "both foreign and domestic industry participants and financial sponsors."
If Orbitz breaks off the deal, valued at $1.33 billion, it would have to pay Expedia $57.5 million. If Expedia backs out or can't get regulatory approval, it would have to pay Orbitz $115 million, according to the filing.
An Orbitz spokesman declined to comment on the filing.
The Orbitz-Expedia deal for $12 per share would mark a major development in the ongoing consolidation of the online travel industry. Expedia is the No. 1 player and Orbitz is No. 3 in market share but had struggled to gain ground.
Expedia also acquired Travelocity this year. With the Orbitz deal, three of the top four consumer brands for online travel would be combined under one corporate roof.
Expedia executives said the Orbitz deal should provide about $75 million annually in "synergies" but provided no detail on what the effect would be on Orbitz headquarters at 500 W. Madison St. in Chicago.
Expedia CEO Dara Khosrowshahi, however, said Orbitz personnel, including 800 at the Chicago headquarters, were an important part of the deal, calling the Orbitz talent in Chicago "really a terrific thing."
Besides Orbitz.com, Orbitz owns CheapTickets, HotelClub and e-bookers. Expedia owns Hotels.com and Hotwire, among others.
The only other big online travel booking company is Priceline Group, which owns Priceline, Booking.com, Kayak and OpenTable.
While Expedia and Priceline dominate the travel market and are taking advantage of quickly growing markets in developing countries, they are facing new pressures from innovative sites like airfare search Hipmunk and last-minute deal site HotelTonight.
Whether that's enough competition to garner government regulatory approval for the Expedia-Orbitz merger remains to be seen.
Expedia officials have said the $1.3 trillion global online travel business is "highly fragmented" and that they were confident in gaining regulatory approval.
Orbitz, launched by major U.S. airlines in 2001 and later owned by private equity companies, has been its own company since 2007.
gkarp@tribpub.com
