USA Interactive stock dropped more than 12 percent Monday after the company
announced a $4.5 billion plan to acquire the remaining shares it doesn't already
own of its three publicly traded subsidiaries -- Expedia Inc., Ticketmaster and
USAi stock fell $3.60 each, or 12.6 percent, to $24.90 per share Monday.
According to the deal, USA Interactive -- which was created last month after
USA Networks Inc. formed a joint venture with Vivendi Universal, contributing
its cable and film-production units -- would issue 2.7 USA shares for every
Expedia share, 1.8 USA shares for each Hotels.com share and 0.8 USA shares for
every Ticketmaster share.
The deal would go a long way toward clearing up the sometimes-confusing
corporate structure of USAi and give it solid footing in the electronic-commerce
Although USAi consolidates the operations of each subsidiary into its own
financial statements, each has its own publicly traded stock.
The deal came just three days after USA announced that it would purchase
time-share-services provider Interval International for $578 million in cash and
In a prepared statement, USAi chairman Barry Diller said the deal, although
unsolicited, was not a 'hostile' takeover attempt, adding that by participating
in the exchange, shareholders of all three subsidiaries will be able to
participate in the 'opportunity and upside' of USA.
'USA's current structure, with multiple public subsidiaries, is an unusual
one,' Diller said in letters to each of the three companies. 'Although we could
continue to operate with the current structure, we think a reconfiguration of
the USA family along the lines we propose is in everyone's interest.'
According to USA's press release, the offer represents a 7.5 percent premium
on the subsidiaries' closing share prices as of May 31.
'The real premium comes in the opportunity for the shareholders of our public
subsidiaries to become owners of an even stronger USA,' Diller said in the
statement. 'It's so clear to us that we can make far more progress together than
we could in the present configuration.'
Ticketmaster and Expedia, in separate statements, said they would appoint a
special committee of independent directors to look at USA's proposal.
The stocks of the three subsidiaries rose on the news. Expedia rose $2.13 each to $73.63, Hotels.com rose $1.16 to
$49.05 and Ticketmaster was up 56 cents to $21.95 each.