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Expedia To Buy Australian Online Agency Wotif

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US online travel company Expedia has agreed to buy Australian online travel agent Wotif for USD$660 million, with Wotif saying that fierce competition in an uncertain market had helped convince it to sell.

Brisbane-based Wotif had once been regarded by analysts as a high growth stock with its high-turnover model of selling discount accommodation.

But it has been struggling to boost earnings as hotel room rates fall and larger rivals such as Expedia and Priceline 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 AUD$3.30 per share, a 14 percent premium to Wotif's most recent closing price of AUD$2.90 and higher than levels traded since December 17, when the company issued a profit warning.

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 favor 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 company.

"We believe that shareholder value will be maximized, and... Wotif Group will be best positioned for the future, through the proposed transaction," he said.

(Reuters)

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