Online travel agency Expedia to buy rival Orbitz for $1.33 billion

Online travel company Expedia Inc said Thursday that it would buy Orbitz Worldwide Inc for about $1.33 billion in cash to bring on the rival’s programmers and widen its customer base.

While Expedia and larger rival Priceline Group, have embarked on acquisitions sprees to dominate the online travel business, three antitrust experts say the Orbitz deal is likely to get U.S. regulatory approval.

“There’s no entry barriers,” said Andre Barlow, a partner in Washington law firm Doyle, Barlow & Mazard PLLC.

Expedia and Priceline face increasing competition from the likes of Google Inc, airlines and hotel chains, which also sell itineraries on their websites.

Shares of TripAdvisor Inc, which Expedia spun off in 2011, rose more than 23 percent on speculation that it would be another industry target.

Expedia bought Travelocity in January and Wotif Group in November. Besides running the website that bears its name, it also owns Hotels.com, Hotwire and a host of other brands. Orbitz brands include CheapTickets and ebookers.

In terms of future acquisitions, Expedia Chief Executive Officer Dara Khosrowshahi said during a call Thursday with investors: “We have got plenty on our plate, and we’re not necessarily looking to jump around in the (coming) weeks or months.”

S&P Capital IQ analyst Tuna Amobi said the purchase price was fair because Orbitz would help Expedia reap full benefit of its investments and grow in international markets, where the strong U.S. dollar has hurt sales.

However, at more than five times Expedia Inc’s market value, Priceline, which owns Booking.com, OpenTable and Kayak, remains tough competition, he said.

Okerstrom downplayed concerns that consolidation would drive up prices, saying that there are more deals for consumers as companies vie for greater share of the $1.3 trillion industry.

Expedia Inc said it expected the deal to generate $75 million in savings and revenue, amounting to an extra 75 cents in adjusted earnings per share, in the year after the two bookings agencies are integrated.

The company said the deal was valued at $1.6 billion, including debt. Spokeswoman Sarah Waffle Gavin said the equity value was based on 110,798,050 Orbitz shares outstanding.