Expedia has struck a ‘definitive agreement’ to buy rival OTA and ebookers parent Orbitz Worldwide for $12 per share in cash.
The deal values Orbitz at $1.34 billion, a premium of around a third based on its recent share price.
The deal remains subject to agreement from the shareholders of both firms and regulatory approval, but directors of both have given the buyout the green light.
Dara Khosrowshahi, president and chief executive at Expedia, said: “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.
“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 family.”
Barney Harford, chief executive of Orbitz Worldwide, added: “Our mission at Orbitz Worldwide has been to build our brands to be the world’s most rewarding places to plan and purchase travel.
“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.”
The deal will help Expedia take on the world’s most valuable online travel agent Priceline as well as stave off the threat from Google ambitions in travel. Around $75 million in synergies are expected from the deal.
Last year Expedia reported $50.4 billion in total transaction value, while Orbitz posted $12.4 billion. Booking.com owner Priceline took $39.6 billion in bookings in the first nine months of 2014, £500 million more than Expedia.
Orbitz’s fourth quarter earnings reported on Thursday revealed a 10% increase in bookings on the same period last year to $2.7 billion.
Reports that Orbitz was looking for a buyer first emerged last month. Expedia will keep the Orbitz brand, it was confirmed.
Last month Expedia completed the takeover of Travelocity from Sabre Corporation for $280 million in cash.