Expedia Group lobs $703m offer for Wotif.com

Online suitor offers Wotif shareholders $3.06 cash per share, 24c special dividend.

US online travel heavyweight Expedia Group has lobbed a $703 million offer for Wotif.com Holdings, offering the Australian company’s shareholders $3.06 cash per share and a special dividend of 24 cents.

The total $3.30 payment is a 31% premium on the average trading price for Wotif.com shares over the past five days.

Emerging from a trading halt, Wotif.com shares were trading at exactly the offer price of $3.30 at 11.06am (AEST), suggesting that the market feels a rival bid is unlikely to emerge.

Wotif.com directors, including founders Graeme Wood and Andrew Brice, Monday sold 20% of their stake in Wotif to Expedia for a combined $108 million, with Mr Wood pocketing $60 million and Mr Brice $47m. At the offer value of $3.30 the remaining stakes of Mr Wood and Mr Brice are worth $78m and $61m respectively.

Mr Wood and Mr Brice have both entered into separate option agreements with Expedia, that allow the suitor to pick up 19.9% of the outstanding shares of Wotif Group.

At the offer value of $3.30 the stakes of Mr Wood and Mr Brice are worth $138m and $108m respectively.

Wotif, a pioneer of online travel-booking in Australia, had a challenging 2013 due to subdued trading conditions in the Australian and New Zealand markets, increased competition from aggregators like Expedia and higher operating costs.

In February, the company posted a fall in first-half profit due to increased costs from strategic investment in marketing and information technology.

Net profit after tax fell by 18% to $22.6m in the six months to December 2013, compared with $27.5 million in the six months to December 2012.

According to Wotif.com, the proposed deal with Expedia follows a comprehensive strategic review undertaken by the company to find the means to maximise shareholder value, which involved engaging with prospective suitors.

Wotif chairman Dick Mcllwain said that the sale of the company is in the best interest of all shareholders and the Expedia offer reflects ‘fair value.”

“As a board we have carefully assessed the changing dynamics of the markets in which we operate, and the uncertainties and risks that we would face if we were to continue as an independent company. With that in mind we believe that shareholder value will be maximised, and that Wotif Group will be best positioned for the future, through the proposed transaction,” Mr Mcllwain said.

“The Expedia group is well placed to leverage and support our strong brands, operations, people and customer relationships in an online travel market that is becoming increasingly global.”

Expedia president and chief executive officer Dara Khosrowshahi said the acquisition was a win-win scenario for both parties.

"This acquisition will allow both companies to continue driving growth opportunities by leveraging the unique strengths each brings to the table. Wotif Group will add to our collection of travel's most trusted brands and enhance our Asia-Pacific supply, while Expedia will expose Wotif Group's customers to our extensive global supply and world-class technology," Mr Khosrowshahi said.

Wotif managing director and chief executive Scott Blume said that the joining Expedia is the best way forward for the company.

"Joining Expedia allows us to rapidly advance two of our strategic initiatives -- strengthening offshore supply and improving our customer and supplier value propositions through enhanced technology," Mr Blume said.

Wotif Group operates online travel brands in the Asia-Pacific region including, Wotif.com, lastminute.com.au, travel.com.au, Asia Web Direct, LateStays.com, GoDo.com.au and Arnold Travel Technology.

Wotif Group is being advised by Goldman Sachs and Clayton Utz.

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