Shares in online travel business Wotif have jumped 25 per cent after global giant Expedia launched a $700 million takeover bid.

Wotif shares were trading at $3.28 at 1110 AEST, up from $2.68 on Friday and just below the $3.30 per share offered under the Expedia deal.

Expedia Group is offering $3.06 a share to acquire all Wotif’s shares, with shareholders also to receive a special dividend of 24 cents per security.

The offer comes as Wotif struggles with falling profitability, with the company on Monday announcing it expects to post a net profit of around $43 million for 2013/14.

That’s down from $51 million in 2012/13 and $58 million the year before.

The company has blamed the high Aussie dollar, which has led to more people holidaying overseas, and strong competition for its declining fortunes.

Wotif has recommended the deal to shareholders, with founder Graeme Wood and fellow key shareholder Andrew Bice already agreeing to sell their shares to Expedia.

Wotif chief executive Scott Blume said the takeover would allow the company to expand in Australia and in the Asia Pacific.

“We believe this will help solidify our position as the premier travel brand in Australia and New Zealand, grow our business across the Asia-Pacific region and increase our exposure and brand awareness to inbound international travellers.”

Expedia chief executive Dara Khosrowshani said the takeover would allow the travel giant to expand its presence in the Asia Pacific.

“Wotif Group will add to our collection of travels most trusted brands and enhance our Asia-Pacific supply, while Expedia will expose Wotif Groups customers to our extensive global supply and world-class technology,” he said.

Wotif owns a number of Australian and Asian travel websites, including Wotif.com, lastminute.com.au, travel.com.au and asiawebdirect.com.