RealTime IT News

Expedia: Just Say No

Online travel operation Expedia said it very much likes its prospects as a stand-alone company, despite a putative offer from majority shareholder USA Interactive to acquire all the rest of the outstanding shares.

Expedia named a special director's committee last month to examine an offer from Barry Diller's USA Interactive to acquire all of the outstanding shares at a 7.5 percent premium. USA acquired a majority stake in February.

USAI subsequently put the brakes on the deal, although Diller said the plan was economically sound. "The idea is that USA wants to simplify its capital structure," he said at the time.

Expedia's special committee was formed immediately after the offer, to promote the interests of the company and the shareholders of Expedia other than USAI. The deal offered Expedia public shareholders 2.6969 USA shares for each of theirs, valuing Expedia at $76.86. The stock today was trading in the $57 range.

Nevertheless, the committee said it believes that Expedia's stand-alone prospects continue to be excellent.

"This management team has an outstanding track record of success and has shown its ability to simultaneously build the business at industry-leading growth rates, operate at high levels of profitability and gain market share from key competitors," said Special Committee Chairman Greg Maffei. "The ... committee is highly confident in both the near-term and long-term prospects for Expedia as a stand-alone company."

"For these reasons, we believe that Expedia's stock price significantly undervalues the long-term prospects of Expedia," he said. "Rather than trading at levels reflecting Expedia's potential -- as we believe should be the case -- it appears that Expedia's stock price has inappropriately become linked to USAI's stock price based on USAI's statements."

USAI today was trading in the $22 range.