Online travel behemoth Expedia Group has announced it has agreed to acquire Liberty Expedia in an all-stock transaction.
Expedia Group chairman Barry Diller has previously controlled the company through his investment vehicle, with Liberty Expedia’s principal asset approximately 23.9 million shares of Expedia Group (consisting of 11.1 million shares of common stock and 12.8 million shares of Class B common stock).
Simultaneously with this agreement, Diller has entered into an exchange agreement with Liberty Expedia and a new governance agreement with Expedia Group.
The new agreements provide that Diller may exchange approximately 5.7 million shares of Expedia Group common stock he owns for an equivalent number of Expedia Group Class B shares (representing approximately 29 per cent of the total outstanding voting power).
Furthermore, Diller will have a purchase/exchange right for a nine-month period following closing of the Liberty Expedia acquisition during which he may acquire additional Expedia Group Class B shares.
If the purchase/exchange right is exercised in full, Diller would have approximately 49 per cent of the voting power of Expedia Group.
The new agreements provide, among other things, for a “sunset” provision relating to the voting power of the Class B shares in excess of the initial 5.7 million shares at such time as Diller is no longer Expedia Group’s chairman or senior executive.
Diller has also agreed that, in any merger or sale of control transaction, all of Expedia Group’s common and Class B shares will be treated equally.
In addition, Liberty Expedia chairman John Malone and his wife have agreed to vote shares beneficially owned by them, representing approximately 32 per cent of the aggregate voting power of the investment company, in favour 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.
Expedia Group president and CEO Mark Okerstrom said the acquisition marks an important milestone in the company’s evolution.
“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,” he said.
“We thank Liberty for their great partnership over the years.”
Malone said: “We are pleased to have reached an agreement with Expedia Group on this important transaction.
“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.”