Expedia announced it would acquire Orbitz Worldwide early Thursday morning, and the stock market quickly responded.
Following the announcement of the $1.6 billion transaction, Expedia’s stock surged, easily making up the 11 percent loss the company experienced last week following the fourth-quarter earnings report. As of publishing, Expedia’s stock was up more than 15 percent.
Orbitz Worldwide will be acquired at $12 per share. Expedia CEO Dara Khosrowshahi said the transaction will be completed with a cash purchase.
Khosrowshahi discussed the acquisitions of Travelocity and Orbitz during a conference call Thursday morning. He said Orbitz has been managed very well, has invested in and maintains a strong technology team, and has unique assets such as the Orbit Partners Network and a robust loyalty program.
“This is actually a pretty darn healthy business, and we’re going to work together with that team, once the deal closes, to figure out how to get to the best of both worlds,” he said.
The purchase comes just weeks after Expedia’s $280 million cash deal to buy Travelocity in January, but Expedia’s leaders are not concerned about the transaction being approved by anti-trust regulators. They said the $1.3 trillion travel industry is “highly fragmented” with many players trying to enter the market.
Expedia will estimate a closing date once the deal receives regulatory and shareholder approval.