Google to Buy ITA Software for $700 Million in Cash

Google Inc. agreed to buy flight- information provider ITA Software Inc. for $700 million to get a bigger slice of the online travel business and make it easier for users to find trip information on the Web.

The acquisition will help Google build flight-search tools, the companies said today in a joint statement. The all-cash deal is subject to adjustments, they said, without elaborating.

“Search is even more important today than ever,” Google Chief Executive Officer Eric Schmidt said today on a conference call discussing the transaction. “In looking at travel, and airline travel in particular, I think you can see that airline travel and search are a perfect opportunity for more innovation, more investment, more interesting products.”

ITA may help Google vie with travel-information services from rivals including Microsoft Corp. and Kayak.com. Each wants more of the online travel market, which in the U.S. generated $88.4 billion in sales last year, according to PhoCusWright Inc., a consulting firm in Sherman, Connecticut.

Google had more than five times the online search share of Microsoft’s Bing in the U.S. in May, according to ComScore Inc. in Reston, Virginia. Microsoft has lured users partly through travel-related tools including features that predict ticket- price changes.

ITA, based in Cambridge, Massachusetts, provides software for online travel company Orbitz Worldwide Inc. and for Microsoft. Schmidt said Google will honor all existing agreements.

‘Significant Review’

With the agreement, Google’s flight-search tools may help users more easily search for flights and compare flight options and prices, Schmidt said. Then, Google would push users to sites to buy tickets.

“It’s a smart move,” Henry Harteveldt, an analyst at Forrester Research Inc. in San Francisco, said of the acquisition. “You are dealing with a product that has very low loyalty or preference among travelers. It’s led by scheduling and the price of the airline ticket.”

Google completed its $750 million acquisition of AdMob Inc., a provider of mobile ads, after the U.S. Federal Trade Commission cleared the deal in May. The deal was first disclosed by Google in November.

Schmidt said he suspects there will be a “significant review” of the ITA deal. He declined to speculate on the timing of when the acquisition will close.

Google, based in Mountain View, California, fell $5.46 to $439.49 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have fallen 29 percent this year.

To contact the reporter on this story: Brian Womack in San Francisco at Bwomack1@bloomberg.net

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