USA Interactive to Acquire Shares in a $1.1 Billion Transaction

14th Apr 2003

USA Interactive and have announced that they have entered into an agreement
by which USA, already the majority owner of, would acquire the
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, and
USA`s intention is for 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 Board of Directors approved the agreement following the unanimous
recommendation and approval of an independent Special Committee of the
Board. Under the agreement, shareholders will receive 2.4 shares of USA
common stock for each share of stock that they own. This represents
approximately a 20% premium based on the closing price of USA stock and
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 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`s minority shareholders,” said Elan Blutinger, Chairman of the Special
Committee of`s Board of Directors. “’s shareholders have an
opportunity to participate in the continued growth potential of USA, which is further
enhanced by its full ownership of”

David Litman, Chairman and CEO of, commented, “Bob Diener and I are
thrilled at the opportunity for 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, 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 that have helped to make this possible and we
look forward to an exciting future.”

In connection with the merger, options would be converted into options to
acquire USA common stock, and 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 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.

USA Interactive
currently owns approximately 68% of the outstanding stock and
controls approximately 97% of the combined voting power of the outstanding
shares. USA, as the holder of a majority of the voting power of has acted by
written consent to approve the transaction. An Information Statement will be mailed to 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).

Related stories on ITN:

(20/03/2003) USA Interactive and Expedia Announce Merger Agreement

(14/10/2002) USA Interactive Terminates Expedia Acquisition Process



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