Expedia Buys Orbitz For $1.6B In Cash To Square Up To Priceline

Next Story

TC Droidcast Episode 37: Is Nvidia Planning A GRID Gaming Box?

After buying Travelocity earlier this month for $280 million, Expedia continues its online travel acquisition spree. Today, the company announced an agreement to acquire Orbitz for $1.6 billion — or $12 per share — in cash, a premium of 29 percent on Orbitz’s current share price.

The deal speaks to ongoing consolidation in the market, but also Expedia’s bigger competitive threat in the form of Priceline, which owns Kayak and other large travel properties, and the fact that perhaps Orbitz saw the consolidation writing on the wall itself.

Expedia says that the boards of both publicly traded companies have approved the deal, which will now be put to Orbitz shareholders for approval.

Expedia will be buying both Orbitz’s portal plus a lot of other brands that it owns.

“We are attracted to the Orbitz Worldwide business because of its strong brands and impressive team. This acquisition will allow us to deliver best-in-class experiences to an even wider set of travelers all over the world,” said Dara Khosrowshahi, president and CEO of Expedia, in a statement. “From the flagship Orbitz.com brand, to other well-known consumer brands such as CheapTickets, ebookers and HotelClub and the business-to-business brands Orbitz Partner Network and Orbitz for Business, the Orbitz Worldwide team has built a devoted customer base and we look forward to welcoming them to the Expedia, Inc. family.”

It’s an ironic turn that Expedia is now buying Orbitz. When Orbitz first formed, it was a joint venture between five major U.S. airlines (Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines, and later American Airlines) established in response to the rise of online ticket companies like Expedia. Expedia was among the companies complaining about Orbitz to antitrust authorities.

It looks like Orbitz was already in play at the time of the Travelocity purchase. It is not clear if Expedia’s deal to buy Travelocity’s U.S. and Canadian assets pushed the company closer to negotiating for its own sale. In any case, it is nothing close to a hostile takeover, judging by the Orbitz statement on the deal.

“Our mission at Orbitz Worldwide has been to build our brands to be the world’s most rewarding places to plan and purchase travel,” said Barney Harford, CEO of Orbitz Worldwide, in a statement. “We’re excited for Orbitz Worldwide to join the Expedia, Inc. family and for our teams to work together to further enhance the offerings we provide to our customers and partners.”

Orbitz and its companies will join other brands owned by Expedia like Hotels.com, Hotwire and trivago.

Featured Image: Kuster & Wildhaber Photography/Flickr UNDER A CC BY-ND 2.0 LICENSE