eLong, Inc. , a leading online
travel service provider in China, today announced that IAC/InterActiveCorp
has exercised its warrant to purchase approximately 17.4 million shares of
high-vote ordinary shares of eLong for an estimated cash purchase price of
approximately US$108 million. The number of shares and purchase price are
subject to adjustment following exercise pursuant to the terms of the
related warrant agreement. IAC acquired the warrant in connection with its
initial investment in eLong in August 2004, in which IAC invested $58.7
million. eLong expects that this sale will be completed in January 2005. In accordance with the transaction agreements relating to IAC’s initial
investment, eLong will use half of the warrant proceeds to purchase
approximately 8.7 million ordinary shares from certain of its pre-IPO
shareholders. The repurchase will occur simultaneously with the completion
of IAC’s warrant exercise. Following the completion of the sale to IAC and
the repurchase from certain pre-IPO shareholders, IAC will own
approximately 52% of the outstanding capital stock of eLong (on a fully
diluted basis), representing approximately 96% of the total voting power
of eLong. As a result of this exercise, IAC also has the right to
designate four additional members for appointment to eLong’s Board of
Directors.

In connection with IAC’s exercise of the warrant, eLong expanded the size
of its Board of Directors from seven to 11 members and announced the
appointment of the following four IAC designees to its Board of Directors:
Mike Doyle, Chief Financial Officer, IAC Travel—Asia Pacific; Dermot
Halpin, Managing Director, Expedia UK; Cameron Jones, Director, Hotels and
Destination Services, IAC Travel—Asia Pacific; and Arthur Hoffman,
Managing Director, Expedia Australia. Following these appointments, six of
the 11 members of eLong’s Board of Directors will be IAC designees. eLong
also announced the appointment of Martin Pompadur, Executive Vice
President of News Corporation, who will replace Richard Xue, eLong’s
Director and Vice President of Business Development and Strategy.

“We are extremely pleased to have a company of IAC’s caliber further
validate the quality and success of eLong’s travel service offerings. By
joining hands with IAC Travel, the world’s largest online travel company,
we believe that eLong’s customers, suppliers, employees and shareholders
will benefit from IAC Travel’s extensive resources, consumer reach and
online travel expertise,” said Justin Tang, Chairman and Chief Executive
Officer of eLong.

“eLong is leading a dramatic transformation in the way that travel is
planned and purchased in China,” said Barney Harford, President, IAC
Travel—Asia Pacific. “We are delighted to be deepening our relationship
with eLong, and we are excited by the opportunity this provides us to
embrace the growth potential of the Chinese travel market. China
represents an $87 billion travel and tourism market opportunity today,
forecast to grow to more than $300 billion by 2014.”
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