(Bloomberg) — Expedia Inc., the online-travel booking service, agreed to acquire Orbitz Worldwide Inc. for about $ 1.34 billion in cash, adding brands such as CheapTickets and ebookers to take on industry leader Priceline Group Inc.
Expedia is paying $ 12 a share to add consumer travel brands such as HotelClub, as well as business-to-business sites such as Orbitz Partner Network. The deal represents a premium of 25 percent to Orbitz's closing price Wednesday. The transaction is valued at about $ 1.6 billion, including net debt, the companies said in a statement Thursday.
The online-travel industry has seen a boom in mergers and acquisitions recently. Last year, Priceline, the largest online-travel company, bought a minority stake in Ctrip.com International Ltd. and paid about $ 2.5 billion to purchase restaurant-reservations website company OpenTable Inc. Last month, Bellevue, Washington-based Expedia also agreed to acquire Sabre Corp.'s Travelocity for $ 280 million in cash, as it tries to bulk up against competitors like Priceline.
With its latest deal, Expedia can "remain the eight hundred pound gorilla in the industry," Daniel Kurnos, an analyst at Benchmark Co., said Thursday. "There are going to be a ton of synergies."
Orbitz had been exploring a sale and reaching out to potential buyers, Bloomberg News reported last month, citing people with knowledge of the matter.
"Orbitz's biggest problem has been they haven't been able to scale. Expedia brings immediate scale," Kurnos said.
The boards of both companies have signed off on the deal, which will still need approval from regulators and a majority of Orbitz's shareholders, according to the statement. Antitrust scrutiny of the transaction is unlikely, Expedia said on a call Thursday.
Expedia has an enterprise value of $ 10.6 billion, compared with Priceline's enterprise value of more than $ 53 billion.
Expedia rose 13 percent to $ 88.37 at 9:34 a.m. New York time. Orbitz soared 21 percent to $ 11.67. Through Wednesday, Expedia shares had fallen 8.4 percent this year.
TripAdvisor Inc. climbed 18 percent to $ 79.47, after closing down 3.9 percent Wednesday following the company's earnings report.
To contact the reporter on this story: Niamh Ring in New York at nring@bloomberg.net
To contact the editors responsible for this story: Cecile Daurat at cdaurat@bloomberg.net Niamh Ring, Tony Robinson
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