Liberty Media Corp. and Vulcan Ventures Inc. Tuesday sealed a deal allowing them to take up to a $190 million stake in priceline.com.
Company founder Jay Walker sold the stock to the firms in a deal which allows them to buy 8 million shares of priceline.com common stock by Aug. 1, 2001 and no later than Aug. 1, 2002. Until that point, Walker will retain voting control and formal ownership of the shares. To compensate Liberty Media and Vulcan for the illiquidity of their investment, Walker gave the two companies options to acquire an equity interest in Walker Digital Corp. for between $1.5 billion and $1.8 billion.
Walker said he will use about $125 million of the after-tax proceeds of the transaction to participate in the third-round financing of WebHouse Club, which he also founded. Priceline WebHouse Club is a privately-held licensee of priceline.com and has received funding from investors including Liberty Media, Vulcan Ventures, Goldman Sachs, Wit Capital Inc., Walker Digital Corp., Walker and members of WebHouse Club’s senior management team. WebHouse allows consumers to name their own price for groceries in major markets around the country.
Walker said the deal would add no shares to the publicly-traded float of priceline.com.
“This transaction represents a small percentage of my priceline holdings, which I increased through a $125 million purchase last year, and I remain by far the largest shareholder,” he said.
Proceeds from the third round of WebHouse Club financing will be allocated to funding continued national expansion of its grocery and gasoline services, as well as ongoing operations and the development and deployment of a high-volume information technology architecture.
The deal comes on the heels of last week’s announcement that priceline.com overshot revenue estimates by $20.85 million in its second-quarter, narrowing its loss to $4.52 million from last year’s loss of $14.3 million.
