Hoping to bolster its e-commerce business, USA Interactive Inc. is making a US$4.5 billion unsolicited bid for the portions of its Expedia Inc., Ticketmaster Inc. and Hotels.com subsidiaries that it doesn't already own, the company announced Monday.
Although USA owns majority stakes in each of the properties, each company operates independently, with its own stock listed on the Nasdaq Stock Market.
"That structure has served us well, allowing exactly the right kind of entrepreneurial activity at the critical early stages in these new interactive business ideas," USA Chairman and Chief Executive Officer (CEO) Barry Diller wrote in his offer to the subsidiaries. "But now it's time for us to begin acting in cohesive concert with all parts of the enterprise."
The New York company's bid to rein in the subsidiaries signals USA's desire to strengthen its e-commerce position by coordinating the strategies of its disparate holdings.
USA is offering Expedia, Hotels.com and Ticketmaster shareholders a stock swap that would give them a 7.5 percent premium over the closing price of their stock on Friday, May 31. The parent company said that it is seeking to increase its equity ownership of each of the subsidiaries to up to 100 percent.
USA stated that it does not see the proposal as a "hostile" bid, however, but a great opportunity for shareholders of the subsidiaries.
Online travel service Expedia.com said Monday that it had received a letter from USA's board of directors announcing the company's intention to acquire its remaining shares, and that it is forming a special committee to assess the offer.
It remains to be seen if the subsidiaries warm to the idea, especially given that Expedia and Hotels.com operate in similar markets. What's more, Expedia has experienced rapid growth amid the boom of the online travel market, and may wish to continue implementing its proven success formula.
But USA sees coordinating its online properties as crucial for building out its e-commerce strategy, which has become a main thrust for the company. USA has already made recent moves to streamline its business by selling its cable, film and television assets to Vivendi Universal SA earlier this year.
"USA Interactive has the potential for dramatic growth, which would only be enhanced by the realignment we propose," Diller wrote.