USA Interactive offers £3bn to buy out online operations

By Saeed Shah
Saturday 11 January 2014 05:36
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Barry Diller's USA Interactive has made a $4.5bn (£3bn) bid to buy out three of its publicly listed subsidiaries to strengthen its e-commerce operations.

The target businesses are online travel agent Expedia, Ticketmaster, which sells tickets to concerts, sports games and other live events, and Hotels.com which sells hotel rooms on the web.

USA Interactive, which already has a majority stake in each of these businesses, made a proposal to increase its equity ownership to 100 per cent in each venture to the units' management at the weekend.

Shareholders of the three units, which are listed on Nasdaq, can exchange their shares for USA Interactive stock at a 7.5 per cent premium to the closing share price of those three businesses on Friday. Mr Diller said the offers are not hostile propositions.

USA Interactive emerged last month as a stand-alone internet and interactive TV group from USA Networks. Mr Diller sold USA Networks' cable TV and film assets to the French media giant Vivendi Universal. USA Networks had bought a 75 per cent stake in Expedia from Microsoft last year.

Mr Diller now divides his time between heading up Vivendi's US entertainment businesses and being chairman and chief executive of USA Interactive, which he aims to grow aggressively.

He recently said that he planned to spend $9bn on e-commerce acquisitions and the latest deal comes just a week after USA Interactive agreed to buy Interval, a travel services company, for $578m in cash and shares.

Mr Diller, the former head of Paramount Pictures and Fox TV, has said that USA Interactive's goal is to have 20 per cent of the country's web and TV shopping market in three years. He sees travel as a key sector. The company also owns the Home Shopping Network.

USA Interactive will have to issue about 156 million new shares to complete the latest transaction. The deal will consolidate ownership under one stock, with no other publicly traded subsidiaries.

Mr Diller said that he was hopeful the offers would be accepted. He said the subsidiaries will "give up some kind of independence. But given that USA Interactive controls them and consolidates their results, that independence is somewhat imaginary".

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