USA Interactive and
Hotels.com have announced that they have entered into an agreement
by which USA, already the majority owner of Hotels.com, would acquire the Hotels.com
shares it does not currently own in a tax- free, stock- for-stock transaction. The transaction
is valued at approximately $1.1 billion based on the closing price of USA common stock
on April 9, 2003.
The transaction would represent the final step in USA’s efforts, begun in June 2002, to
simplify its corporate structure by buying in its public subsidiaries. As a result of these
transactions, all of USA’s interests will be indivisible inside USA’s public security.
The transaction would not change the current operating structure of Hotels.com, and
USA`s intention is for Hotels.com and Expedia to continue to be operated separately.
Travel is, however, its own sector and USA would continue to review strategy and over
time may decide to make changes.
transaction is expected to be slightly accretive to USA`s budgeted
adjusted earnings per share for 2003.
The Hotels.com Board of Directors approved the agreement following the unanimous
recommendation and approval of an independent Special Committee of the Hotels.com
Board. Under the agreement, Hotels.com shareholders will receive 2.4 shares of USA
common stock for each share of Hotels.com stock that they own. This represents
approximately a 20% premium based on the closing price of USA stock and Hotels.com
stock on March 18th, 2003, the day prior to the announcement of USA’s merger with
Expedia. In the transaction, USA wo uld issue to Hotels.com public shareholders
approximately 43.0 million basic shares and 45.2 million shares on a fully diluted,
treasury method basis.
Barry Diller, Chairman and CEO of USA Interactive, said, “David Litman and Bob
Diener, in classic entrepreneurial fashion, have created a great company. We were lucky
enough to know that at an early stage, so we’ve watched their determination and fierce
dedication in building up the enterprise…and we believe all that will continue because
the incentives are all in place and our interests completely aligned for the future.”
“The Special Committee carefully reviewed the transaction in consultation with our
financial and legal advisors and we believe that the merger is in the best interests of
Hotels.com`s minority shareholders,” said Elan Blutinger, Chairman of the Special
Committee of Hotels.com`s Board of Directors. “Hotels.com’s shareholders have an
opportunity to participate in the continued growth potential of USA, which is further
enhanced by its full ownership of Hotels.com.”
David Litman, Chairman and CEO of Hotels.com, commented, “Bob Diener and I are
thrilled at the opportunity for Hotels.com to participate on a broader scale in the future
success of USA Interactive. We are convinced that this me rger will enhance the growth
prospects for Hotels.com, and we are more determined than ever to achieve our company
goals through this exciting combination with USA. Bob and I would like to thank the
more than 1,200 employees of Hotels.com that have helped to make this possible and we
look forward to an exciting future.”
In connection with the merger, Hotels.com options would be converted into options to
acquire USA common stock, and Hotels.com warrants would be converted into warrants
to acquire, or exercisable for, USA common stock. David Litman, Chairman and CEO,
and Bob Diener, President, will continue in their current positions, and the new USA
shares they receive in the transaction in respect of their Hotels.com shares that are
currently subject to transfer restrictions will be subject to those same transfer restrictions.
The transfer restrictions remain in effect until March 2004.
currently owns approximately 68% of the outstanding Hotels.com stock and
controls approximately 97% of the combined voting power of the outstanding Hotels.com
shares. USA, as the holder of a majority of the voting power of Hotels.com has acted by
written consent to approve the transaction. An Information Statement will be mailed to
Hotels.com shareholders in connection with the transaction. No separate USA
shareholder approval is required. The transaction, which is subject to customary
conditions, is expected to be completed in the summer of 2003. The transaction is not
subject to any material adverse effect conditions (including the possible effects of war).
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(20/03/2003) USA Interactive and Expedia Announce Merger Agreement