Online travel merchant Expedia Inc. bolstered its
vacation line by acquiring a vacation wholesaler from Classic Vacation Group
Inc. for $52 million in cash and stock.
Classic Custom Vacations is a CLV unit that wholesales vacation packages to
Hawaii, Mexico, North America, Europe and the Caribbean. The deal enhances
Expedia’s custom vacation package business. CLV will be liquidated after the
purchase.
Bellevue, Wash.-based Expedia said the deal involves payment of $5 million in
cash and the retirement of about $47 million of Classic Vacation Group debt
using Expedia common stock while assuming net liabilities of about $30
million.
Expedia stock was up $1.45 on the news, to $44.66 in mid-day trading.
Expedia said CCV expects to report a profitable 2001, with approximately $300
million in gross travel sales.
“The custom vacation packaging business is an area of growth and focus for
us,” said Richard N. Barton, president and CEO of Expedia. “The acquisition
brings to Expedia new relationships with premier properties in Hawaii and
other sunny destinations. Additionally, by bringing our leading-edge database
and vacation packaging technology to Classic’s travel agents, we believe we
can help them accelerate their sales.”
Ron Letterman, president of Classic Custom Vacations, will remain as
president of the unit, which becomes a division of Expedia. Classic’s offices
will remain in San Jose, Calif. Classic Custom Vacations started developing
its tour operator business in Hawaii more than 25 years ago.
After the sale of Classic Custom Vacations, Classic Vacation Group has agreed
to liquidate and distribute remaining assets to CLV shareholders. In
connection with the Expedia transaction, Three Cities Research Inc., the
company’s principal note holder, and Thayer Equity Investors III L.P., the
company’s principal shareholder, have agreed to provide a payment of 26 cents
per share to CLV’s public shareholders. CLV stock was trading unchanged at 25
cents today.
Expedia Buys Vacation Wholesaler
