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Barry Diller's Expedia Group to Buy Liberty-Expedia in Stock Deal

Olivia Carville
Barry Diller's Expedia Group to Buy Liberty-Expedia in Stock Deal

(Bloomberg) -- Expedia Group Inc. agreed to acquire Liberty Expedia Holdings Inc. in a $2.6 billion all-stock deal that will simplify the online travel company’s ownership model and boost its value.

Expedia’s super-voting stock structure has long been divided between two billionaire media moguls: John Malone and Barry Diller.

Under terms of the deal announced Tuesday, each holder of Liberty Expedia shares will receive 0.36 of a share of Expedia Group common stock. Diller, Expedia chairman, is expected to wind up with about 29 percent of the voting power of the combined company. Malone and his wife agreed to vote shares beneficially owned by them, representing about 32 percent of the voting power of Liberty Expedia, in favor of the transaction, the companies said.

Stemming from a deal made back in the 1990s, Malone has owned the super-voting shares of Expedia through his holding company, Liberty Expedia. However, Diller has held the right to vote on Malone’s shares through an irrevocable proxy, which expires in May. The companies expect the transaction to close in the summer, at which point all Liberty Expedia nominees to the Expedia Group board would step down.

Before the arrangement, Malone could have taken control of Expedia Group if Diller stepped down or passed away. Now, Diller becomes the biggest shareholder with 29 percent, and Expedia Group is no longer a “controlled company.”

“This transaction marks an important milestone in the evolution of Expedia Group,” said Mark Okerstrom, chief executive officer 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.” Expedia will have 3.1 million fewer shares outstanding once the deal is completed.

Read more here about Malone’s notoriously complex holdings structure.

The two companies had discussed the transaction earlier this year. Analysts said the move would simplify the structure and result in a higher valuation for Expedia.

Expedia shares rose 1.9 percent to $127.80 at 11:14 a.m. in New York.

Expedia has a convoluted ownership history, having originally been spun out of Microsoft Corp., then bought by Diller’s IAC/InterActiveCorp. and then spun out again into its own entity in 2004. This complex ownership structure contributes to a lower valuation than its chief rival, Booking Holdings Inc., analysts have said.

The deal, which also includes $320 million of net debt, appears to have concluded amicably.

“This road, frequently traveled 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,” Diller said in the statement. “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.”

(Updates with valuation in first paragraph.)

To contact the reporter on this story: Olivia Carville in New York at ocarville1@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Molly Schuetz, Tony Robinson

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