Expedia Inc (NASDAQ: EXPE), a travel booking site based in the United States, revealed that it would buy Wotif.com Holdings Ltd, an Australian online travel group. The deal was made for the U.S travel giant to purchase the Australian site for $660 million USD cash.

The Australian travel company, based in Queensland, disclosed that its directors and its co-founders Graeme Wood and Andrew Brice are proponents of the deal, and plan to vote in its favor. Wotif’s directors own 20.2% while each co-founder owns 15.5%.

Expedia offered $3.08 USD per share for Wotif’s stock – a 14% premium to its latest closing price of $2.71 USD. The $3.08 price mark is also much higher than trading level since the company announced and profit warning on December 17^th. Wotif’s stock soared 25% higher after the deal was announced.

Wotif has been struggling for the past year with few hotel bookings and declining profits. Its shares are down 42% over the past twelve months because of increased competition he Australian hotel market. Expedia’s purchase of the Australian company would save Wotif of certain disaster, as well as build a base to establish and grow their presence in the Asian-Pacific region, since Wotif already has a large portfolio of top brands in the travel industry. Some of Wotif’s operational brands include: wotif.com, Asia Web Direct, Arnold Travel Technology, lastminutetravel.au, and travel.com.au. It’s selection is focuses primarily on plane and hotel bookings, and offers more than 29,000 properties to be booked all around the world.

The Australian company reported A$593 million in total bookings, which translates to A$76 million in revenue. This year, Wotif projects $149 million in revenue and a net profit of $43 million.

Scott Blume, managing director and chief executive officer of Wotif, said that joining forces with Expedia helps propel Wotif to their two goals – increased offshore supply and using technology to improve customer and supplier offers.

The deal is expected to close at the end of the fourth quarter. It is still awaiting the approval of the shareholders of Wotif Ltd and regulations.

Expedia’s stock closed at $82.21 – a 2.4% increase from the previous closing.

 

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