Expedia has reached an agreement to purchase Orbitz Worldwide, which includes brands such as CheapTickets, Ebookers and HotelClub, for $12 per share.
The purchase values Orbitz at $1.6 (including debt) and is 25% premium over closing price on Wednesday.
Orbitz shareholders will receive $12 a share in cash, a 25% premium over Wednesday’s close. Orbitz shares surged 21% and last traded above the offer price in August 2013. Expedia shares jumped more than 13%.
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.
Expedia purchased Travelocity that was merely an Expedia skin back in January and already compasses number of different brands that are powered by Expedia.
Why have all these different brands when there is no difference in the offerings or prices and when they look exactly like Expedia but with different name?
As a consumer, I have found that Orbitz is sometimes able to price airline tickets more competitively than Expedia probably due to the use of different GDS. Also, depending on the itinerary, some more complex ones have been ok with Orbitz when Expedia just chokes them (works both ways).