December 2, 2020

DealBook: Expedia Plans to Split Into Two

Expedia, the online travel company, said on Thursday that it would split into two companies, with its TripAdvisor business becoming a separate business.

The company said it either spin off TripAdvisor to shareholders or would reclassify Expedia’s stock. A spin-off, if approved, is expected to be completed in the third quarter.

Shares of Expedia surged in after-hours trading. But the credit-ratings agency Standard Poor’s warned that it might cut Expedia’s ratings as a result. “The transaction could raise Expedia’s adjusted debt leverage to mid-2x, assuming all existing debt remains in place at Expedia,” Andy Liu, a credit analyst with S.P., said in a statement. Expedia has more than $1.6 billion in debt, according to Capital IQ.

Expedia was spun off from IAC/InterActiveCorp, the Internet conglomerate, in 2005. Barry Diller, the chairman of IAC, is also chairman of Expedia.

In December, Mr. Diller and John C. Malone of Liberty Media reached an agreement to separate their mutual interests, with Liberty giving up its voting stake in IAC for cash and two business units. But Mr. Diller and Mr. Malone remained intertwined at Expedia, in which Liberty holds a 17.6 percent stake.

The company’s statement announcing the split said that “it is expected that Expedia’s dual-class equity capital structure and the governance arrangements between Barry Diller and Liberty Media will be mirrored at TripAdvisor following the transaction.”

The announcement comes a week after Expedia resolved a dispute with American Airlines that had kept the airline’s fares and schedules off Expedia’s Web sites.

Expedia also owns Hotels.com and Hotwire. It has a market value of $6.2 billion. TripAdvisor Media Network accounts for about 11 percent of the company’s annual revenue, according to Thomson Reuters.

Corporate splits have been nearly as active as acquisitions in recent months. Expedia’s plan follows announcements by ITT, Fortune Brands, Marathon Oil and Sara Lee to divide their businesses.

Article source: http://feeds.nytimes.com/click.phdo?i=5f536d0054e47c57e5e616257d145ce1

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