Not supposed to do this, but I'll post from the WSJ anyway. This is a big deal for both the airlines and the online travel business. Cendant Is Close to Deal for Orbitz Purchase for $1.2 Billion Would Offer Big Premium; Platform for Galileo Data By DENNIS K. BERMAN and RYAN CHITTUM Staff Reporters of THE WALL STREET JOURNAL September 29, 2004 In a deal that would shake up the growing business of online travel, Cendant <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=CD&transform-name-quote-search=nvp-set-p -sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portfol io&p-headline=wsjie> Corp. is close to sealing a purchase of Web travel company Orbitz <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=orbz&transform-name-quote-search=nvp-set -p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portf olio&p-headline=wsjie> Inc. for about $1.2 billion, according to people close to the matter. The boards of both companies were expected to approve the deal last night for about $28 a share, a person close to the matter said. That price would value the nation's third-largest online travel business at a premium of 35% to the $20.77 that its shares traded at on the Nasdaq Stock Market at 4 p.m. A spokeswoman for Orbitz declined to comment on the matter. Spokespeople for Cendant didn't return calls. A deal for Orbitz, of Chicago, would be a key move for Cendant, which already has its own database unit, Galileo International Inc., that is used for collecting travel schedules and prices used by professional travel agents and fed to online sites. Consumers increasingly have been redirecting their spending toward online bookers and away from old-line travel agencies. Last year, travelers booked $3.4 billion of travel over Orbitz, giving it 18% market share, behind Expedia Inc. and Travelocity. More than one-third of all U.S. travel will be booked online by leisure and do-to-yourself business travelers in 2006, up from 15% in 2002 and 20% in 2003, according to Sherman, Conn., research firm PhoCusWright Inc. Consumers' access to the best-available fares -- something unleashed in part by the Internet -- has put the crunch on the country's largest airlines. Orbitz was founded by the nation's five largest airlines: AMR <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=amr&transform-name-quote-search=nvp-set- p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portfo lio&p-headline=wsjie> Corp.'s American Airlines, UAL Corp.'s United, Delta <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=dal&transform-name-quote-search=nvp-set- p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portfo lio&p-headline=wsjie> Air Lines, Northwest <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=nwac&transform-name-quote-search=nvp-set -p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portf olio&p-headline=wsjie> Airlines and Continental <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=cal&transform-name-quote-search=nvp-set- p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portfo lio&p-headline=wsjie> Airlines. Late last year, Orbitz was split off. The airline industry has been scrambling for fresh capital and Orbitz presented a rare spot of opportunity for Cendant. "I think it's about Cendant wanting Orbitz and being willing to pay a premium. A majority of Orbitz owners are airlines, and they need cash," said Philip Wolf, president and CEO of PhoCusWright. The purchase would concentrate more power in the top three online-travel agencies, which already control more than three-quarters of all Web-based agency bookings. "Tomorrow, we'll have fewer 'shelves' to get on. And what are the cost of those shelves?" asked Jim Young, senior vice president of global distribution at hotel firm InterContinental <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=IHG&transform-name-quote-search=nvp-set- p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portfo lio&p-headline=wsjie> Hotels Group PLC, which uses the systems to list and book rooms. The deal also would mark at least a temporary change in strategy for Cendant, a New York company that also owns travel brands Days Inn, Howard Johnson, and the Budget and Avis car-rental companies. Henry Silverman, its chief executive, has been telling investors for more than a year that the company's days of big-time acquisitions were over for the foreseeable future. Mr. Silverman wanted to prove to Wall Street that Cendant could expand its business organically, not only via acquisition. He has said the company would only do "tuck-in" acquisitions of less than $1 billion. Airlines, hotels and car-rental companies feed their data to travel-information companies such as Sabre <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=TSG&transform-name-quote-search=nvp-set- p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portfo lio&p-headline=wsjie> HoldingsCorp. and Cendant's Galileo system. These databases are accessed directly by travel agents and flow into online consumer sites such as Orbitz and Sabre's own Travelocity. With the purchase of Orbitz, analysts say, Cendant might be able to put its Galileo data directly on the Orbitz site. An impediment to such a plan is Orbitz's contract with WorldSpan LP, another travel-data provider, which ends in 2011. Airlines and hotels have increasingly been bypassing travel agencies' professional-booking systems and cutting deals directly with the online travel agencies. By owning Orbitz, Cendant will get in on some of the money it may be losing from those suppliers, says Paul Keung, an analyst with CIBC World Markets. Cendant's acquisition of Orbitz continues a string of online travel company acquisitions made by conglomerates during the past few years. In 2003, InterActiveCorp <http://online.wsj.com/mds/companyresearch-quote.cgi?route=BOEH&template=com pany-research&ambiguous-purchase-template=company-research-symbol-ambiguity& profile-name=Portfolio1&profile-version=3.0&profile-type=Portfolio&profile-f ormat-action=include&profile-read-action=skip-read&profile-write-action=skip -write&transform-value-quote-search=iaci&transform-name-quote-search=nvp-set -p-sym&nvp-companion-p-type=djn&q-match=stem§ion=quote&profile-end=Portf olio&p-headline=wsjie> agreed to buy shares of Hotels.com it didn't already own, in an continuing effort to build itself into an electronic-commerce giant. Also that year, InterActiveCorp agreed to buy travel Web site Hotwire.com as well as the remaining stake it didn't already own in Expedia, now the largest online travel agency in terms of gross bookings. At the same time, Sabre, after being fully spun off from AMR Corp. in 2000, went on an acquisition spree that included last-minute-travel seller Site59.com and former rival GetThere. It also bought back the remaining stake it didn't already own in Travelocity.com, which now is the No. 2 online travel agency. ---- Melanie Trottman contributed to this article. Write to Dennis K. Berman at dennis.berman@xxxxxxx and Ryan Chittum at ryan.chittum@xxxxxxx