BELLEVUE, Wash. and ENGLEWOOD, Colo., April 16, 2019 /PRNewswire/ — Expedia Group, Inc. (NASDAQ: EXPE) and Liberty Expedia Holdings, Inc. (“Liberty Expedia”) (NASDAQ: LEXEA, LEXEB) announced today that they have entered into a definitive agreement under which Expedia Group has agreed to acquire Liberty Expedia in an all-stock transaction. Liberty Expedia’s principal asset is approximately 23.9 million shares of Expedia Group (consisting of 11.1 million shares of Expedia Group common stock and 12.8 million shares of Expedia Group Class B common stock).
Under the terms of the agreement, each holder of Liberty Expedia Series A common stock and Series B common stock (collectively, “Liberty Expedia common stock”) will receive 0.360 of a share of Expedia Group common stock. As a result of this transaction, Expedia Group expects to retire, on a net basis, approximately 3.1 million shares, and former holders of Liberty Expedia common stock are expected to own, in the aggregate, shares of Expedia Group common stock representing approximately 14% of the total number of outstanding shares of Expedia Group common stock and Class B common stock, based on approximately 140 million shares of Expedia Group common stock and approximately 5.7 million shares of Expedia Group Class B common stock currently expected to be outstanding at the closing of the transaction.
In connection with the acquisition, Barry Diller, Chairman and Senior Executive of Expedia Group, is expected to exchange up to 5.7 million shares of Expedia Group common stock for an equal number of shares of Expedia Group Class B common stock (the “Diller Exchange”) and enter into a new governance agreement regarding his ownership interest in Expedia Group. As a result of the transaction, Mr. Diller will own approximately 29% of the voting power of the company, and Expedia Group will no longer be a controlled company under applicable Nasdaq rules. The new governance agreement will include rights to increase his holdings in Class B common stock, subject to certain restrictions and circumstances under which these additionally acquired shares of Class B common stock automatically convert into Expedia Group common stock, all as further described in Expedia Group’s Form 8-K filed with the Securities and Exchange Commission.
The Boards of Directors of both companies approved the transaction, which is subject to the completion of the Diller Exchange and customary closing conditions, including approval by holders of a majority of the aggregate voting power of the Liberty Expedia common stock and the receipt of any applicable regulatory approvals. The transaction was unanimously recommended to the Expedia Group Board of Directors for approval by a special committee composed of independent, disinterested directors and advised by independent financial and legal advisors. The Board of Directors of Liberty Expedia has unanimously recommended that its stockholders vote in favor of the transaction. In addition, John C. Malone, the Chairman of the Board of Liberty Expedia, and his wife have agreed to vote shares beneficially owned by them, representing approximately 32% of the aggregate voting power of Liberty Expedia, in favor of the transaction. The companies expect the transaction to close in the summer of 2019, at which point all Liberty Expedia nominees to the Expedia Group Board of Directors would step down.
“This transaction marks an important milestone in the evolution of Expedia Group. It represents a strong benefit to our shareholders – simplifying and improving our corporate and governance structure and effecting a meaningful reduction in our share count,” said Mark Okerstrom, President and Chief Executive Officer, Expedia Group. “We thank Liberty for their great partnership over the years.”
“We are pleased to have reached an agreement with Expedia Group on this important transaction,” said Dr. Malone, Chairman of Liberty Expedia. “I have enjoyed being a part of the company’s evolution over the years, dating back to our initial involvement through IAC and growing into the global travel platform it is today. We look forward to continued progress with leadership from Barry Diller and Mark Okerstrom as they continue to evolve Expedia Group.”
“This road, frequently travelled since 1994, between me, John Malone, and Liberty Media, has produced much success, none of which could have been possible without Dr. Malone’s encouragement and support,” said Barry Diller, Chairman and Senior Executive, Expedia Group. “While the formal partnership ends with this transaction, my gratitude to John and Liberty will never end for giving me the opportunity to begin the journey.”
Prior to executing the transaction agreements, the parties terminated the proxy swap arrangements that had been in place since Liberty Expedia’s 2016 split-off from then-Liberty Interactive Corporation. As a result, Mr. Diller may again exercise his right to vote Liberty Expedia’s shares of Expedia Group stock pursuant to his legacy proxy, and Mr. Diller no longer holds a proxy over shares of Liberty Expedia common stock beneficially owned by Dr. Malone. Although the proxy swap arrangements have terminated, Liberty Expedia is not required to register as an investment company or avail itself of any related safe harbors because of its pending acquisition by Expedia Group.