* Wotif struggling with weak hotel bookings, increased
* Shares jump 24 pct to just below the offer price
* Deal has backing of directors, co-founder
(Adds analyst and Wotif comment, details of the deal)
By Byron Kaye
SYDNEY, July 7 U.S. travel giant Expedia Inc
said it agreed to buy Australian online travel agent
Wotif.com Holdings Ltd for $660 million, with Wotif
saying that fierce competition in an uncertain market had helped
convinced it to sell.
Brisbane-based Wotif had once been regarded by analysts as a
high growth stock with its high-turnover model of selling
But it has been struggling to boost earnings as hotel room
rates fall and larger rivals like Expedia and Priceline.com Llc
undertake aggressive advertising campaigns.
"It may be a little bit of a low point in Wotif's earnings
cycle so in that regard (the offer) is a little opportunistic,"
said Morningstar analyst Daniel Mueller.
Expedia, whose online brands include Hotels.com and Hotwire,
will be able to expand its footprint in Asia-Pacific with the
deal. It offered the equivalent of A$3.30 per share, a 14
percent premium to Wotif's most recent closing price of A$2.90
and higher than levels traded since Dec. 17, when the company
issued a profit warning.
Wotif's shares jumped 24 percent to A$3.285. The sale will
be conducted by Goldman Sachs.
Wotif said in a statement its directors, who own 20.2
percent of the company's shares, and co-founder Andrew Brice,
who has 15.5 percent, plan to vote in favour of the deal. The
deal needs 75 percent shareholder approval to succeed.
Wotif Chairman Dick McIlwain said in the statement the
company had considered the changing market dynamics and the
"uncertainties and risks" of continuing as an independent
"We believe that shareholder value will be maximised,
and...Wotif Group will be best positioned for the future,
through the proposed transaction," he said.
Expedia's Nasdaq-listed shares last closed up 2.4 percent at
($1 = 1.0702 Australian Dollars)
(Reporting by Byron Kaye; Editing by Edwina Gibbs)