Real estate heavyweight Cendant Corp. confirmed today that it will purchase online travel site Orbitz for $1.25 billion in cash, or about $27.50 per share. The acquisition of Orbitz places Cendant among leading domestic online travel businesses.
Orbitz was founded by the top five air carriers: American, United, Delta, Northwest and Continental, and each still holds a stake in the online travel company. Its largest competitor, Expedia.com, is owned by InterActiveCorp, which also owns LendingTree, RealEstate.com and ServiceMagic, among other business channels.
Orbitz.com, which launched in June 2001, enables travelers to search for airline tickets from more than 455 airlines, lodging, rental cars, cruises and vacation packages.
Orbitz is debt-free and, as of June 30, had approximately $200 million in cash on hand. Orbitz and Cendant board of directors approved the deal, but it is still subject to regulatory and other approvals.
Cendant said it intends to maintain both the Orbitz and CheapTickets businesses as differentiated consumer brands in the leisure travel sector. In the corporate travel sector, customers will be able to choose between Travelport and Orbitz for Business, using the best of what each brand has developed. The integration plans anticipate that CheapTickets and Travelport will combine their technology platforms and operations to form a common platform with Orbitz, based in Chicago.
“The Orbitz acquisition fits perfectly with Cendant’s articulated goal to be among the leaders in every business in which we participate,” Cendant’s Chief Financial Officer Ronald L. Nelson said.
Cendant owns the Century 21, Coldwell Banker, Coldwell Banker Commercial and ERA real estate franchise brokerages. Cendant Corp. is a parent of NRT Inc., which has a number of corporate-owned real estate brands, including: The Sunshine Group, The Corcoran Group, Coldwell Banker, Coldwell Banker Commercial, ERA and Sotheby’s.
Travel, hospitality and vehicle and marketing/financial services are also among Cendant’s business divisions. In addition, the company owns Galileo International, a computerized reservation system used by travel agents.
Under the terms of the definitive agreement, a wholly-owned subsidiary of Cendant will commence simultaneous cash tender offers to acquire all Orbitz outstanding Class A and Class B shares at a price of $27.50 per share. Following successful completion of the tender offers, any remaining shares of Orbitz will be acquired in a cash merger at the same price.
The transaction is expected to be close in November.
Cendant shares (NYSE:CD) traded at $21.70 this morning, down slightly from Tuesday’s closing price of $22.02. Orbitz shares (Nasdaq: ORBZ) traded at $27.13 today, up from Tuesday’s closing price of $20.77.
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