USA Interactive Buys Out
Expedia for $3.1 Billion
Rest of Shares Purchased in Stock;
Diller Quits as CEO of Vivendi Unit
By JULIA ANGWIN
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- After nine months of negotiations, USA Interactive reached an agreement to pay $3.1 billion in stock for the 46% of online travel agent Expedia Inc.'s shares that it doesn't already own.
At the same time, USA Interactive Chief Executive Barry Diller resigned as chairman and chief executive of Vivendi Universal Entertainment. Vivendi Universal SA Chairman and Chief Executive Jean-Rene Fourtou will head the unit, which includes Universal's movie studio, theme parks, film and television businesses -- some of which the French company purchased from Mr. Diller a year ago.
Mr. Diller's unusual nine-month role as chief executive of two separate but intertwined companies had been the cause of much speculation and had prompted some complaints from USA Interactive investors and employees. Mr. Diller said that now that Vivendi is looking to sell its entertainment assets, it created a conflict of interest for him, since he and USA Interactive both are minority shareholders in the unit. Mr. Diller also is seen as a potential bidder for the entertainment businesses, although the prospects of that have dimmed in recent weeks.
"I had thought this was going to be a six-, 12-month transition period where I would integrate the assets and come back to USA," Mr. Diller said. "The reason I stayed as long as I did was just to stabilize it."
Mr. Diller's resignation from the entertainment unit means that he will no longer be involved in managing the Universal movie studio, theme parks or TV operations. Vivendi Universal Entertainment's president and chief operating officer, Ron Meyer, now will report directly to Mr. Fourtou. During his tenure overseeing the film studio and other assets, Mr. Diller often ruffled feathers with his brusque manner and zeal for cost cutting. Universal officials played down the impact of Mr. Diller's departure, as Mr. Meyer has already been overseeing the same business units.
With the Expedia deal, Mr. Diller is one step closer to his goal of making USA Interactive into an e-commerce powerhouse comparable to eBay Inc. or Amazon.com Inc. Last year, USA Interactive began streamlining its business by selling its film, TV and cable assets to Vivendi and buying a majority stake in Expedia, of Bellevue, Wash.
In June, USA Interactive made an unsolicited $4.5 billion offer to buy the portions of its publicly traded subsidiaries -- Ticketmaster, Expedia and Hotels.com -- that it didn't already own. At that time, Mr. Diller offered to pay each subsidiary a 7.5% premium over its closing stock price, but his offer was rebuffed by all but Ticketmaster.
On Wednesday, USA Interactive agreed to give Expedia shareholders 1.93875 shares of USA stock for each share of Expedia stock, which represented a 30% premium to Expedia's closing price Tuesday. USA said it would issue 124.9 million shares, on a diluted basis, to pay for the acquisition. The company also said its board has authorized a stock buyback of as many as 30 million shares.
USA shares were down $1.64, or 6.2%, at $24.85, and Expedia shares were up $8.23, or 21%, at $47.13 in 4 p.m. trading Wednesday on the Nasdaq Stock Market. Vivendi's American depositary receipts were up 56 cents, or 3.8%, to $15.36.
Updated March 20, 2003
Expedia for $3.1 Billion
Rest of Shares Purchased in Stock;
Diller Quits as CEO of Vivendi Unit
By JULIA ANGWIN
Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- After nine months of negotiations, USA Interactive reached an agreement to pay $3.1 billion in stock for the 46% of online travel agent Expedia Inc.'s shares that it doesn't already own.
At the same time, USA Interactive Chief Executive Barry Diller resigned as chairman and chief executive of Vivendi Universal Entertainment. Vivendi Universal SA Chairman and Chief Executive Jean-Rene Fourtou will head the unit, which includes Universal's movie studio, theme parks, film and television businesses -- some of which the French company purchased from Mr. Diller a year ago.
Mr. Diller's unusual nine-month role as chief executive of two separate but intertwined companies had been the cause of much speculation and had prompted some complaints from USA Interactive investors and employees. Mr. Diller said that now that Vivendi is looking to sell its entertainment assets, it created a conflict of interest for him, since he and USA Interactive both are minority shareholders in the unit. Mr. Diller also is seen as a potential bidder for the entertainment businesses, although the prospects of that have dimmed in recent weeks.
"I had thought this was going to be a six-, 12-month transition period where I would integrate the assets and come back to USA," Mr. Diller said. "The reason I stayed as long as I did was just to stabilize it."
Mr. Diller's resignation from the entertainment unit means that he will no longer be involved in managing the Universal movie studio, theme parks or TV operations. Vivendi Universal Entertainment's president and chief operating officer, Ron Meyer, now will report directly to Mr. Fourtou. During his tenure overseeing the film studio and other assets, Mr. Diller often ruffled feathers with his brusque manner and zeal for cost cutting. Universal officials played down the impact of Mr. Diller's departure, as Mr. Meyer has already been overseeing the same business units.
With the Expedia deal, Mr. Diller is one step closer to his goal of making USA Interactive into an e-commerce powerhouse comparable to eBay Inc. or Amazon.com Inc. Last year, USA Interactive began streamlining its business by selling its film, TV and cable assets to Vivendi and buying a majority stake in Expedia, of Bellevue, Wash.
In June, USA Interactive made an unsolicited $4.5 billion offer to buy the portions of its publicly traded subsidiaries -- Ticketmaster, Expedia and Hotels.com -- that it didn't already own. At that time, Mr. Diller offered to pay each subsidiary a 7.5% premium over its closing stock price, but his offer was rebuffed by all but Ticketmaster.
On Wednesday, USA Interactive agreed to give Expedia shareholders 1.93875 shares of USA stock for each share of Expedia stock, which represented a 30% premium to Expedia's closing price Tuesday. USA said it would issue 124.9 million shares, on a diluted basis, to pay for the acquisition. The company also said its board has authorized a stock buyback of as many as 30 million shares.
USA shares were down $1.64, or 6.2%, at $24.85, and Expedia shares were up $8.23, or 21%, at $47.13 in 4 p.m. trading Wednesday on the Nasdaq Stock Market. Vivendi's American depositary receipts were up 56 cents, or 3.8%, to $15.36.
Updated March 20, 2003
