Expedia buying rival Orbitz in $1B deal

Acquisition is the second in the past month for bigger firm.

The company is looking to extend its reach and keep pace in the travel-booking industry,

NEW YORK — Expedia is buying rival online travel site Orbitz for approximately $1.33 billion, adding to the stable of brands it has snapped up recently in order to extend its reach and keep pace in the fiercely competitive travel-booking industry.

Expedia’s acquisition of Or- bitz is its second major deal in the past month as the industry continues to consolidate. Expedia announced the $280 million acquisition of another rival, Travelocity, in late January. This also follows the company’s July announcement that it was buying Wotif.com for $658 million.

By bringing Orbitz into the fold, Expedia gains access to the Orbitz namesake brand, as well as brands like Cheap-

Tickets and HotelClub. Expedia’s portfolio already consists of nearly a dozen brands such as Hotels.com and Hotwire.

Speculation swirled last month that Orbitz may be bought, when a media report said that the company was considering selling itself. An Orbitz spokesman declined to comment at the time.

Expedia, based in Bellevue, Wash., said Thursday that it will pay $12 per share, a 25 percent premium to Orbitz’s closing price of $9.62 Wednesday.

Shares of Orbitz Worldwide Inc., based in Chicago, soared $2.10, or 21.8 percent, to $11.72 in trading Thursday. Expedia’s stock surged $11.35, or 14.5 percent, to $89.57.

Expedia CEO Dara Khosrowshahi said during a conference call that Orbitz was an attractive acquisition option in part because of its highly recognized brands and loyal customers. Expedia also likes Orbitz’s loyalty program, with plans to invest in it and grow it further.

Khosrowshahi, along with Chief Financial Officer Mark Okerstrom, said that the deal will help Expedia better compete for customers in a sector that is constantly seeing new players emerge.

“We believe Orbitz can add to scale and add to our ability to run a more efficient machine,” Khosrowshahi said.

Okerstrom said that these types of acquisitions are important, as they provide a way to avoid being overtaken by rivals like Google and TripAdvisor.

Expedia is also up against competitors like Priceline Group, which owns sites such as Priceline, Booking.com, Kayak and OpenTable. And there are new pressures from sites like airfare search Hipmunk and lastminute deal site HotelTonight.

The Expedia executives said that they are optimistic they won’t run into major resistance from regulators on the Orbitz deal, with Khosrowshahi noting that consolidation is natural in a highly fragmented marketplace.

The boards of both companies have approved the deal, but it still requires a nod from the majority of Orbitz shareholders.

AP Expedia analytics workers Mike Brown (left), Saurin Pandya and Prashanti Tata chat in an alcove set up for employees at its offices in Bellevue, Wash. Expedia said Thursday that it is buying rival online travel site Orbitz. The deal comes less than a month after Expedia announced the acquisition of Travelocity.