Just two days after USA Interactive Inc. announced its intention to acquire the portions of three of its subsidiaries that it does not already own, a frenzied sell-off of the company's stock forced it to make a quick retreat and indefinitely push back its acquisition plans.
USA stock (USAI) fell nearly 13 percent Monday to US$24.77 following news that the company was making a US$4.5 billion unsolicited bid to acquire the rest of subsidiaries Expedia Inc., Ticketmaster Inc. and Hotels.com in a stock exchange. According to analysts, the sell-off resulted from stockholders' concern that a buyout would force the subsidiaries to work more closely together under the USA umbrella, resulting in a loss of autonomy and market share for the individual subsidiaries.
In an announcement released after the markets closed Wednesday, the company, which operates a number of online businesses, said that it would not commence any exchange offers in the near future given the market's reaction.
Although USA still intends to bid for the subsidiaries, the company said that it recognizes that "it will take some time for everyone involved to digest all the information, understand all the issues and work through the process."
"This process doesn't have any kind of locked down time clock," the statement added.
USA's move to take over the remaining portions of Expedia, Ticketmaster and Hotels.com came as part of the company's strategy to strengthen its e-commerce business. In an exchange offer, the parent company offered stockholders of the subsidiaries a 7.5 percent premium over the closing price of their stock on Friday, May 31.
After the New York company announced a delay in the exchange offer, stockholders began to question USA as to whether it would increase the premium offered. In its statement, USA said that it had no intention of increasing the conversion ratios, however, but added that "circumstances may change."