Expedia has grown way passed the travel empire they originally thought they would become. Just some of their holdings include the original Expedia.com, Hotels.com, and even Hotwire.com. They recently acquired Travelocity and now it appears they will be acquiring Orbitz, one of their biggest competitors.
Bloomberg reported early this morning that Expedia Inc agreed to buy Orbitz Worldwide Inc for $1.34 billion dollars in cash, which puts Orbitz at $12 a share and 25% over their Wednesday closing price. In other words this is a big deal for Orbitz shareholders.
This latest acquisition should put Expedia well into the lead over rival Priceline.com. Analaysts, including Bloomberg, suggest that the travel industry is in a mergers and acquisitions spree to combat what they see as an all out pricing and convenience war mounting with Google.
Expedia, which was once a Washington State startup, has grown to become the “800 lb gorilla in the industry” Daniel Kurnos an analyst with Benchmark Co said in a statement.
Expedia doesn’t seem worried about antitrust and regulatory hurdles. “Competition is fierce,” Expedia Chief Executive Officer Dara Khosrowshahi said on a conference call, citing the entrance of rivals including Google. “This is an absolutely huge industry and it’s highly fragmented.”
Expedia has most of the travel industry in it’s wheelhouse now. Airfares are still a good part of Expedia.com’s core business. Travelocity, which was acquired last month by Expedia, also does a tremendous amount of airfare as does Orbitz. Expedia also has hotels under their wing with hotels.com, and hotwire.com two mainstays in the accommodations market.
Although many companies insist that after an acquisition things will be the same for the acquired company, Expedia has done a good job of keeping it’s core businesses separate. Hotels.com and Expedia.com function as competitive online experiences accept when you check into a hotel they often say you booked with Expedia regardless of brand.
The companies expect the transaction to close this year. Both company’s boards have voted on the deal they are now waiting for Orbitz shareholders to sign off on it and regulatory approval.