Expedia on Thursday said it completed its acquisition of Orbitz
Worldwide.
Expedia paid $12 a share for Orbitz, or about $1.34 billion.
With the acquisition, Expedia lengthens its position over Priceline Group as
the world’s largest OTA by bookings.
Orbitz and Expedia combined for $35.6 billion in bookings
for the first six months of the year, compared with Priceline’s $28.7 billion.
Priceline remains the world’s largest OTA by revenue, generating $4.12 billion
through June, compared with $3.5 billion for Expedia and Orbitz combined.
“Given Orbitz’s focus on transforming the way consumers
around the world plan and book travel, we couldn’t be more aligned,” Expedia
CEO Dara Khosrowshahi said in a statement.
Expedia, which
announced the buyout in February, cleared its last hurdle towards the
acquisition on Wednesday when the U.S. Department of Justice completed its
six-month probe into the deal and concluded that the buyout wouldn’t threaten
competition or hurt consumers.
Expedia, Orbitz and Travelocity combined to account for
about three-quarters of U.S. bookings through OTAs, Phocuswright said in a
report released last November. Priceline accounted for another 19%.
Still, with Google, Amazon and TripAdvisor expanding their
presence in travel booking, the DOJ said a combined Expedia-Orbitz wouldn’t
account for a large enough share of that sector to stifle competition.
Hotel trade group the American Hotel & Lodging
Association (AH&LA), which last month went public with its opposition to
the proposed transaction, said Wednesday that it was “disappointed” in the
DOJ’s decision.
While Expedia had estimated that the acquisition may cut
combined annual operating costs of Expedia and Orbitz by $75 million a year,
Cantor Fitzgerald analyst Naved Khan estimated in a note to clients on Thursday
that “the potential accretion from the deal could be even higher.”
“We see a number of strategic advantages for Expedia from
the acquisition, including 1) addition of several high-quality brands owned by
Orbitz — Orbitz.com, CheapTickets, ebookers and HotelClub; 2) ownership of
Orbitz Partner Network and Orbitz for Business, which we believe are superior
offerings (technologically) to Expedia's Egencia; and 3) potential benefits
from Orbitz's unique ‘Orbucks’ loyalty program, which has helped drive customer
retention and loyalty for Orbitz,” wrote Khan, who has a “buy” rating on
Expedia.