By Angela Chen
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 22% premarket
to $11.70 and last traded above the offer price in August 2013.
Expedia shares jumped more than 10%.
Orbitz sells online travel services through its namesake site,
as well as ebookers.com and CheapTickets.com, among others.
Expedia, which was launched in 1996 by a small division within
Microsoft, went public in 1999 and has grown into a travel giant
with brands including Hotels.com, Hotwire, eLong Inc. and
Trivago.
Over the past year, Expedia has been buying more brands 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.
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multiple sites and startups that offer unpublished discounts and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.
Orbitz is due to report quarterly results later Thursday.
Other names in the sector, like Priceline.com Inc. and
TripAdvisor Inc. also got a bounce on the news. Priceline edged up
1.1% premarket, and TripAdvisor, itself an Expedia spinoff, was up
15%. TripAdvisor reported a bigger-than-expected surge in quarterly
revenue after Wednesday's closing bell.
Write to Angela Chen at angela.chen@dowjones.com
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