Victor, here is the story. The short answer is about 20.5m shares at an average warrant price of $56..... As for terms, well, I don't have the details; but I'm sure that if you want them they might be at the Edgar site or are probably available through Investor Relations.
FWIW, the story is posted on a number of news sites...
More FWIW. This contempory investor read the story at 7:00am in the WSJ after first hearing about it the night before online. This contemporary investor then read additional stories before the market open; bought addl at slightly over 75 at the open, sold at 78, and then bought again at 76. Not unhappy at this time....
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NEW YORK -(Dow Jones)- Shares of Priceline.com Inc., the online service that lets users name their own prices on hotel roomss, airline tickets and other items, rose Wednesday on the belief that deals with three major airlines will more than make up for the mammoth charge related to those pacts.
Priceline announced plans to expand its airline alliances and will take a $1.1 billion charge in the fourth-quarter to account for the move. Despite the big charge and the expected flood of new stock, shares of Priceline (PCLN) advanced Wednesday $8.125, or 12%, closing at $76.875, in brisk Nasdaq trading.
Priceline, based in Stamford, Conn., will issue warrants to United Airlines parent UAL Corp. (UAL), US Airways Group Inc. (U) and AMR Corp. (AMR). In exchange, the three carriers will join the company's name-your-own-price system for purchasing air tickets.
Priceline already sells tickets for most other major airlines, including Delta Air Lines Inc. (DAL), Continental Airlines Inc., (CAL), Northwest Airlines Corp (NWAC), Trans World Airlines Inc. (TWA) and America West Holdings Corp. (AWA). "This will give us the chance on routes we have not been able to cover to better serve our customers," said Richard S. Braddock, chairman and chief executive of Priceline.
But signing up the new carriers will come at a cost to shareholders. The hefty charge reflects the accounting costs of issuing warrants for 20.5 million shares to the airlines at an average exercise price of $56 a share. The shares underlying the warrants amount to about 10% of Priceline's fully diluted common stock.
"At this point in time, yes, it's dilutive," said Sara Zeilstra, analyst with Warburg Dillon Read LLC, of the deals. "But the incremental business the company will receive from these airlines will more than offset that dilution," she added.
"Our relationship with Priceline will generate an exciting and important new revenue stream for our company," said Rakesh Gangwal, president and chief executive officer of US Airways.
Meanwhile, Delta reduced its holdings in Priceline, selling a portion of its shares in Priceline so that its equity position more accurately reflects its share of the domestic airline market. Delta currently has a stake in Priceline that far exceeds that of other carriers.
Delta said Wednesday that it sold about 2.1 million Priceline common shares back to the company for $125 million. As part of the arrangement, Delta said, it agreed to exchange six million Priceline shares for six million shares of newly issued convertible preferred stock. Delta said it may convert the preferred stock into common stock on a one-for-one basis.
In addition, Delta said it will receive new warrants to acquire 5.5 million common shares of Priceline for $56.625 each. The deal will leave Delta with about 8.5 million shares of Priceline, narrowing its holdings from 16.5 million shares previously held.
Priceline will have a chance to rein in the dilutive effect of issuing so many warrants by recording that transaction on its books using the so-called "treasury stock method," an accounting technique. When the three airlines eventually exercise their warrants, paying Priceline $56 a share, Priceline will use the entire proceeds - roughly $1.15 billion - to buy back its own shares on the open market, company officials said.
Although diminished by those moves, the magnitude of the stock's eventual dilution will depend "highly" on the price of Priceline shares at the time of repurchase, noted Robert Mylod, Priceline's senior vice president of finance. "The higher the price goes," he added, "the more the dilution."
The deals with United, American and US Airways represent a kind of "capitulation" by those companies, which in the past have been critical of the name-your-own-price system of buying tickets, Zeilstra said.
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