Investors in Michigan may be interested in news that could potentially be disruptive to the online travel industry. In a statement issued on Feb. 12, Expedia announced its intent to acquire Orbitz for a total value of $1.6 billion, including $1.34 million in cash, as well as net debt. The transaction has already been approved by both companies' boards, but still needs to be approved by Orbitz shareholders and regulatory bodies.
Many pundits claim that the acquisition may help Expedia compete with Priceline and possibly become the new leader in the industry. Expedia proposed a series of acquisitions as of late, and some fear that it may ultimately struggle to absorb all of the organizations and effectively manage the various brands. By the close of the day following the news, Expedia and Orbitz stock rose 15 percent and 22 percent, respectively. Expedia's enterprise value is around $12 billion, while Priceline's is valued at nearly $55 billion.
Analysts claim that more market share may provide Expedia with better economies and more power when negotiating prices with hotels. Expedia claims that Orbitz will retain its independent branding if the acquisition is completed. Some analysts believe that the transaction will not have any significant impact for end-users at all. A former lawyer at the Federal Trade Commission noted that the acquisition could lower competition within the industry, but many still face competitors from other types of travel providers.
Investors and business owners who need more information about acquisitions might benefit from consulting a lawyer. Legal counsel is helpful for companies that become interested in engaging in discussions that concern potential takeover targets or the ramifications or adverse outcomes that may arise with various courses of action. In order to ensure that the client's long-term interests are protected, lawyers can review the terms of new proposals and agreements.
Source: Bloomberg Business, "Expedia to Buy Orbitz for $1.34 Billion to Take On Priceline", Annie Massa, Feb. 12, 2015