Australia's biggest provider of online accommodation bookings is trading about 8 percent lower than the A$3.30-a- share bid from Bellevue, Washington-based Expedia, offering a better return than almost all of the deals in the region. The Australian Competition & Consumer Commission is determining whether the A$703 million ($629 million) deal would hand Expedia enough market power to charge local hotels higher commissions. A verdict is due Oct. 2.
Competition is healthy enough to allay concerns raised in the regulator's preliminary report, JPMorgan Chase & Co. said, noting that traditional bricks-and-mortar travel agents also generate business online. After reviewing the deal, the commission will probably end up clearing it, especially if Expedia offers to cap hotel commissions in Australia, said Rivkin Securities Pty.
"Based on what I think the risks are, it's trading lower than it should," Shannon Rivkin, special-situations analyst and director at Rivkin, said by phone. "There's a strong likelihood the deal is going to get approved."
