Expedia acquisition of Wotif.com under the microscope

The Australian Competition and Consumer Commission (ACCC) is launching a review into the proposed AU$700 million acquisition of Wotif.com by Expedia, and is inviting interested parties for comments on how it will impact on competition in the online travel agents market.

Expedia launched its takeover bid for Australia's Wotif.com two weeks ago, where it plans to pay AU$3.06 per share to acquire all of Wotif.com Holdings shares, and shareholders would also receive a special dividend of 24 cents per security.

Speaking about the potential takeover, Wotif chairman Dick McIlwain said in a statement the sale would be the best way to maximise shareholder value, and it would give Expedia the opportunity to leverage Wotif.com's brand in an increasingly global market.

"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. 

"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."

According to the ACCC, it is considering the proposed acquisition under section 50 of the Competition and Consumer Act 2010, in fear that the acquisition may substantially lessen competition in the market.

"The main area of competitive overlap between Expedia and Wotif in Australia is in the retail supply of online accommodation booking services to consumers," the ACCC said.

"Expedia and Wotif also supply online booking services for flights and other travel products (such as travel packages, or car rentals in the case of Expedia)."

Areas in which the ACCC is encouraging for comments include what impact the acquisition will have on bricks and mortar travel agents such as STA Travel and Flight Centre and direct booking channels including online sales by airlines and hotels; network effects the acquisition will have on travel content owners; and the impact it will have on corporate travel management services including Carlson Wagonlit and American Express.

The closing date for submissions is 6 August 2014.