Expedia buys rival travel operator Orbitz for USD 1.6 billion

US online travel operator Expedia announced plans to buy rival Orbitz Worldwide for about USD 1.6 billion, in a move that further consolidates the sector.
Expedia will pay USD 12 in cash for each Orbitz share, in the takeover approved by the companies' boards of directors.
"We are attracted to the Orbitz Worldwide business because of its strong brands and impressive team," said Dara Khosrowshahi, Expedia's president and chief executive.
The deal which includes the Orbitz online booking site as well as brands such as CheapTickets, ebookers and HotelClub is subject to shareholder and regulatory approval.
The price represents a 29 percent premium over the most recent share price of Orbitz, the companies said in a statement.

Barney Harford, the CEO at Orbitz, said the tie-up would "further enhance the offerings we provide to our customers and partners."

The announcement comes less than a month after Expedia announced the purchase of rival Travelocity in a USD 280 million deal.
The dealmaking takes place amid increased competition in the travel sector from websites such as Priceline-owned Kayak and others which scan the Internet for the best deals.
Expedia operates other travel sites including Hotels.Com and Carrentals.Com. It also holds a stake in the Chinese travel operator eLong.
According to the research firm Morningstar, Expedia and Priceline each have around 30 percent of the global online travel agency booking market, followed by Orbitz's eight percent share, with several smaller players holding the remaining share.

Expedia in 2014 saw the number of bookings rise 28 percent to 50 million, and reported a profit of $398 million.
RBC Capital Markets analyst Mark Mahaney said in a note to clients that the deal was "not surprising given Expedia's recent appetite for acquisitions and press reports of Orbitz putting itself on the market."
He said the USD 75 million in synergies estimated by the companies was "achievable" as a result of cost savings from the consolidation, and maintained that "we don't believe regulatory hurdles will be significant."
Mahaney said Orbitz "has been one of the weakest players in online travel" while Expedia "has demonstrated an ability to work through industry challenges, while laying the foundation for strong growth.