Expedia Closes Deal to Buy Orbitz

Orbitz Worldwide was officially bought by former rival Expedia on Thursday, a day after federal regulators dropped an objection to the $1.6 billion merger.

The combination marks a major development in the ongoing consolidation of the online travel industry, with Expedia, the No. 1 player based in Bellevue, Wash., buying Chicago-based Orbitz, which was No. 3 in market share but had struggled to gain ground with its over-reliance on flight bookings instead of more lucrative hotel bookings.

In announcing the deal in February, Expedia executives said the Orbitz acquisition should provide about $75 million annually in “synergies.”

In a statement, Expedia CEO Dara Khosrowshahi said that “given Orbitz’s focus on transforming the way consumers around the world plan and book travel, we couldn’t be more aligned.

“As we bring our talented teams and capabilities together, we will be well positioned to accelerate the pace of innovation to deliver even better customer experiences to Orbitz’s loyal customer base and to further enhance the marketing and distribution capabilities we offer to our global supply partners.”

The Justice Department said Wednesday it would not challenge the merger, contending the deal is unlikely to hurt competitors or consumers. The agency says it found no evidence that Expedia is likely to charge new fees, and says the deal should not affect the commissions Expedia charges. It noted that Expedia will still have to compete with The Priceline Group Inc. and others. The agency also says the online travel business is changing rapidly.

Expedia Inc. agreed to buy Orbitz in February in an all-cash deal for $12 per share.

Before the deal, Orbitz owned Orbitz.com, CheapTickets, HotelClub and e-bookers. Expedia owns Hotels.com and Hotwire, among others.

Expedia also acquired Travelocity earlier this year.

The only other big online travel-booking company is Priceline, which owns sites including Priceline, Booking.com, Kayak and OpenTable. However, there are many smaller players.