Online travel company Expedia to buy Orbitz Worldwide

Travel retail website Expedia has agreed to buy rival operator Orbitz Worldwide, according to reports, in a move which will make it the dominant travel retailer globally.

The deal is thought to be worth around $1.3bn, says The Wall Street Journal, and shareholders of Orbitz will receive $12 for every share they own.

That offer represents a 25 per cent premium over the closing price of Orbitz shares on Wednesday.

Shares in Expedia rose nearly 13 per cent in early trading, while Orbitz rose 20 per cent.

The purchase represents significant consolidation of the online travel industry. Orbitz operates travel sites such as ebookers.com and CheapTickets.com, while Expedia runs hotels.com and Trivago.

Euromonitor claims that the acquisition will make Expedia the biggest travel retail player globally, with a market share of six per cent pushing it ahead of competitor Priceline.

Chief executive of Expedia, Dara Khosrowshahi, said in a statement: "We are attracted to the Orbitz Worldwide business because of its strong brands and impressive team."

It is thought that the deal will still need final approval from regulators over potential monopolistic concerns, reports Bloomberg. However, Chief Financial Office Mark Okerstrom said that this was unlikely to prove problematic as the market share of the merged company would still be in single figures.

“It is a $1.3 trillion industry and is highly fragmented,” he said.

It had been reported last month that Orbitz was exploring the possibility of a sale, having appointed a financial adviser to approach potential purchasers.

Expedia was created by Microsoft in 1996, its first internet venture, and floated in 1999 as it was "no longer about software intensive technology”.

Early this year it bought another travel company, Travelocity, for a reported $280m.