RealTime IT News

USA Interactive in $4.5B Buyout Bid

USA Interactive's e-commerce juggernaut keeps rolling on, this time with a pitch to buy out three of its e-commerce subsidiaries in a stock deal valued at about $4.5 billion.

The company said it has offered to purchase the remaining shares in online travel site Expedia, Inc. , room-booking play Hotels.com and ticket seller Ticketmaster that it doesn't already own.

If successful, the move would shore up for the company ownership in three of its fast-growing travel and entertainment subsidiaries and bolster USA's CEO and Chairman Barry Diller's bid to build an end-to-end e-commerce powerhouse.

The New York-based USA is offering stockholders of the three subsidiaries the chance to exchange their shares for USA shares at a 7.5 percent premium. Based on Friday's closing prices, the offer would value Expedia's shares at $76.86, Hotels.com at $51.48 and Ticketmaster at $22.99. USA would have to issue about 156 million new shares to cover the offer. Shares of all three companies were up on the news during Monday's trading session.

The move comes just three days after USA announced it would shell out $578 million in cash and stock to purchase Interval International, which specializes in sales of vacation timeshares.

Officials of all three companies announced they were in the process of forming special committees to consider the offers, which USA said were anything but hostile.

Of his latest move to lock up the pipes and infrastructure of online travel and leisure-related sales, Diller said he acknowledged that the simultaneous exchange offers were "certainly unconventional."

Until now, the ownership structure of the subsidiaries has served the company well, Diller said, "allowing exactly the right kind of entrepreneurial activity at the critical early stages in these new interactive business ideas as well as providing tremendous value creation for everyone involved."

But the time has come for the companies under the USA roof to begin acting in cohesive concert, "with all the parts of the enterprise, where all of our businesses are aligned and integrated." Only then can the company actually execute well on its ambitious e-commerce agenda, he continued.

That agenda intensified last year when USA began creating USA Interactive by selling USA's movie and cable assets to Vivendi Universal.

From there, it has been buying up or consolidating shares in e-commerce plays, or buying assets that complement its plans to be a pure e-commerce company.

In addition to its stakes in Expedia, Ticketmaster and Hotels.com, the company is in the midst of launching a new cable channel called USA Travel Channel, its platform for uniting transactions, television and travel with online travel sales it picked up with its acquisition of online travel company National Leisure Group.

Diller has pledged to spend $9 billion over the next few years on its e-commerce roll-up strategy. To that end, it now owns businesses that offer via the Internet, phone or on television, access to e-commerce, travel and ticketing services, personals and city guide information.