Cendant in talks to buy Orbitz cbs.marketwatch.com

Full story Orbitz shoots up 27% on takeover talks: "If Cendant, which owns Galileo, a computerized reservation system, were to buy Orbitz, it would build upon its online travel business. Cendant purchased Cheap Tickets in August 2001 for $400 million in cash, according to Dealogic. Orbitz could also work with Galileo...

"Orbitz puts a fair number of tickets through Worldspan, and it would be natural that Cendant would move those bookings to the one that they own," said Brian Barth, CEO of Sidestep, a travel site. "

Wed update: eyefortravel.com :

"Cendant, which owns Avis car rental and the Days Inn hotel chain, is close to acquiring Orbitz, online travel service controlled by an alliance of airlines, for about $1.1 billion.

This is according to a report published in the New York Times today, which states that the boards of Cendant and Orbitz were to meet separately last night to approve the sale.

The deal comes at a time when travellers are increasingly turning to Internet bookings, as opposed to using the services of traditional travel agents.

“The airlines started Orbitz in 2000 as a rival to Expedia and online ticketing sites,” says Andrew Ross Sorkin, New York Times Reporter. “The original investors - including Delta, United, Northwest, Continental and American - hoped to take advantage of the increase in ticket sales over the Internet.”

He adds that the sale of Orbitz will provide a quick, and possibly much needed, injection of cash.

“For the airlines, which control about two-thirds of Orbitz's stock, the transaction is a way to cash out of an investment that has proved to be a big winner - first with its spinoff last year and now with the sale.”



“Orbitz is expected to become the centerpiece of Cendant's online travel businesses, which include CheapTickets.com and Galileo, an electronic travel eservation business that competes with the Sabre reservation system, owned by Sabre Holdings, which also controls Travelocity.com,” explains Sorkin.

Evidently, Cendant hopes to combine Orbitz's reach and its own travel businesses to package deals that include airfare, lodging and car rental, enabling it to offer better fares to consumers and attain higher profit margins.