USA Interactive Delays $4.5 Billion Offer
June 6, 2002
atnewyork.com
By Erin Joyce
USA Interactive (NASDAQ:USAI) has put on indefinite hold its $4.5 billion stock offer to buy out remaining shares of subsidiaries Expedia (NASDAQ:EXPE), Hotels.com (NASDAQ:ROOM) and Ticketmaster (NASDAQ:TMCS) it didn't already own.
The reason: negative market reaction to USA's stock that made the offers increasingly unappealing.
In a statement released Wednesday, the e-commerce company, which is in the hunt to build up a travel and entertainment e-commerce power, said although it wanted to commence the stock exchange offers for the companies quickly, market reaction to the ratios it had offered shareholders made it hold off on the formal tender. For now, at least.
Shares of the New York-based USA Interactive have been sliding since Monday when it offered stockholders of the three wholly-owned subsidiaries the chance to exchange their remaining shares for USA shares.
The deal offered Expedia public shareholders 2.6969 USA shares for each of theirs. For Hotels.com, the offer was an exchange ratio of 1.8064 and Ticketmaster's offer was 0.8068 USA shares for each Ticketmaster share.
The offer was a 7.5 percent premium on each company's average price, but USA's shares started to slide after the offer was made public, going from $28.50 before it made the pitch to $25.10 on Tuesday, down 12 percent. At that rate, the swap ratios started to narrow, especially the .0868 exchange ratio for Ticketmaster, which closed at $22 Wednesday.
Because of market reaction, "we will not commence any exchange offers in the near future," the company said, nor would it increase the conversion ratios on hold, yet still on the table.
"This process doesn't have any kind of a locked down time clock. We have patience because our perspective is truly long term -- and, meanwhile, the businesses will continue to operate as effectively and efficiently as they have in the past," the USA statement said.
In an interview with the Wall Street Journal, USA Chairman and CEO Barry Diller said USA shareholders had griped that the offer was overpaying for the subsidiaries, and that subsidiaries had complained the offers were too low. "Both statements can't be true." He also said he would wait until the market is ready to accept his offer. "This is eventually going to happen," he told the Journal. "It could take us two months or two years. Our time clock has no end date."
After announcing it would hold off on the formal exchange offer Wednesday, USA closed up 93 cents, or close to 4 percent, at $26.03. |
