Skift Take

Orbitz Worldwide is putting itself up for sale, and the leak to Bloomberg may be a signal that the bidding hasn't been particularly robust to date.

With Travelocity seemingly on the verge of getting officially acquired by Expedia Inc., Orbtiz Worldwide may soon get a new owner, as well.

Bloomberg reports that Orbitz has a financial advisor and is exploring a sale.

An official at a competitor to Orbitz told Skift two weeks ago that it was an open secret that Orbitz has been engaged in a process to be acquired for some time, although the activity now appears to have entered a more formal stage. According to the source, Goldman Sachs is representing Orbitz in the sale.

Bloomberg reports that Orbitz, which until recently had been controlled by Travelport and the Blackstone Group, is attracting interest from private equity companies and other online companies. Orbitz’s stock rose 7.7 percent to $9.87 per share mid-afternoon on January 20.

Six years after Orbitz hired Barney Harford as president and CEO, market conditions might make this a relatively attractive time to sell. Orbitz merger and acquisition rumors have been kicking around for years, but Travelocity’s 2013 decision to outsource its operations to Expedia Inc., giving Expedia even more clout with hoteliers, may have put more pressure on Orbitz to find an exit.

The 46 percent premium that OpenTable attracted when it got acquired by the Priceline Group last year wouldn’t dash Orbitz’s hopes either, although Orbitz management couldn’t hope for that kind of boost in their wildest dreams.

Harford has managed to turn Orbitz Worldwide around to an extent in terms of a recovering stock price compared with several years ago, but the company is going nowhere fast in terms of even being in the conversation with Priceline/ and Expedia.

In the all-important hotel business, Priceline (27 percent room night growth in Q3 2014) and Expedia Inc. (24 percent growth) are growing much faster than Orbitz Worldwide (19 percent) and from a much larger base.

Orbitz has made strides in building its hotel business relative to air, with hotels and vacation packages accounting for 53 percent of revenue in the third quarter, but the mix is still not an overwhelming tilt toward hotels compared with its rivals.

Who would want to acquire Orbitz, if anyone?

Beyond private equity bidders, Expedia has stated publicly that it would welcome new white label deals modeled on its Travelocity partnership, but an outright acquisition of Orbitz could trigger antitrust hassles — especially since it appears Expedia is in the final stages of purchasing Travelocity outright.

Would the Priceline Group step into the void to pick up Orbitz? It doesn’t seem likely given the weakness of Orbitz Worldwide globally, but it isn’t out of the question.

A source says both Priceline and Expedia are signaling to Wall Street that they aren’t interesting in acquiring Orbitz.

It would be more likely for a foreign online travel agency, or even cash-rich Alibaba, with little or no U.S. presence, to consider acquiring Orbitz.

Amazon, which is developing a new hotel platform, would be a long-shot acquirer of Orbitz if Amazon wanted to make a huge statement and immediately get traction in the U.S.

All things being equal, a buyout by a private equity firm wouldn’t be the most opportune scenario for Orbitz, which struggled for years to pay down debt foisted up on it by Travelport and Blackstone.


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Tags: expedia, orbitz, ota, travelocity

Photo credit: Orbitz Wordlwide CEO Barney Harford. Orbitz

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