Shares of Expedia Inc. jumped more than 11 percent Thursday after the online travel company announced it will buy rival Orbitz Worldwide Inc. for $1.3 billion. The move came nearly three weeks after Expedia acquired Travelocity from Sabre Corp. for $280 million.
Following the announcement Thursday, shares of Orbitz skyrocketed more than 21 percent, to $11.68, on the New York Stock Exchange. Meanwhile, shares of Expedia’s soared more than 11 percent, to $87.54, on the Nasdaq.
Expedia said it will pay $12 a share in cash for the rival online travel agency, representing a premium of 24.7 percent over Orbitz’s Wednesday close. The deal attributes an enterprise value of $1.6 billion to Orbitz.
“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,” Dara Khosrowshahi, Expedia CEO and president, said in a statement Thursday.
Bellevue, Washington-based Expedia has grown into a travel giant after going public in 1999. Companies in Expedia’s portfolio include Hotwire Inc., Hotels.com and eLong Inc., as well as Australia’s Wotif.com. Expedia recently slipped behind rival Priceline Group Inc. to become the world’s second-largest travel-services company by bookings, but now the firm can add Orbitz to its list, along with such brands as CheapTickets, ebookers and HotelClub.
Last week, Expedia reported weaker-than-expected fourth-quarter earnings results, weighed down by a strong U.S. dollar and losses in its China division.