US-based online travel agent Expedia has swooped on Australian agency Wotif.com after its share price languished at an all-time low.
Both companies announced the $700 million takeover today.
Under the deal, Expedia Group will pay $3.06 per share to acquire all Wotif.com Holdings shares and shareholders will also receive a special dividend of 24 cents per security.
The total $3.30 payment is a 31 per cent premium on the average trading price for Wotif.com shares over the past five days, but well down on its 2013 high of $5.80.
It closed Friday at $2.68.
Shares jumped 25 per cent in early trades this morning.
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Wotif shares were trading at $3.28 at 1040am, just below the $3.30 per share offered under the Expedia deal.
Wotif directors have recommended shareholders accept the offer.
Company founders Graeme Wood and Andrew Bice have agreed to sell their shares to Expedia.
Wood holds around 20 per cent of shares in the company while Bice owns around 15.5 per cent.
Wotif’s value took a tumble in December last year after a profit downgrade of around 20 per cent for the half-year.
The company, however retained a solid dividends outlook.
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On that day (18 December) shares in the online accommodation provider lost nearly 32 per cent of their value, or $1.33, to close at $2.85.
For the company, a one-time market darling, it was the biggest one-day share crash since listing on the ASX in 2006.
Wotif chairman Dick McIlwain said in a statement to the stock exchange today that the sale was the best way to maximise shareholder 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,” he said in a statement on Monday.
“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.”
McIlwain said Expedia would be able to leverage Wotif.com’s brand in an increasingly global travel market.
Wotif also released a profit update Monday, announcing it expects to post a net result of around $43 million for the 2013/14 financial year.
That’s down from $51 million in 2012/13 and $58 million the year before.
The company blamed the high Aussie dollar, which has led to more people holidaying overseas, and strong competition for its declining fortunes.
Wotif.com started out in March 2000, based in Brisbane.
It expanded into Canada, Malaysia, New Zealand, Singapore and the United Kingdom and listed on the Australian Stock Exchange in June 2006.
By early 2010 its share price had soared to more than $7.
Its point of difference among online travel agents was that it limited its hotel booking details to the next three months on the basis that hotels drop their rates closer to the booking date.
