Expedia snubs parent company's bid
The online travel specialist says it's doing just fine on its own, without a bigger investment from USA Interactive.
Last month, USA Interactive had proposed buying all the shares it didn't already own in subsidiaries Expedia, Hotels.com and Ticketmaster. It pulled back on those plans a few days later, after strong negative reaction from shareholders, but it hasn't technically withdrawn the offer.
Bellevue, Wash.-based Expedia, which formed a committee to consider the USA Interactive offer, asserted Thursday that its independent future continues to look bright.
"The special committee is highly confident in both the near-term and long-term prospects for Expedia as a standalone company," Greg Maffei, chairman of the committee, said in a statement.
In addition, Maffei said that the online travel company's stock price, which has dropped around 20 percent since the initial USA Interactive bid, "has inappropriately become linked to USAI's stock price based on USAI's statements." The current stock price, he said, "significantly undervalues" the long-term prospects of Expedia.
The bid would give Expedia shareholders 2.6969 shares of USA Interactive for each Expedia share. At the time the offer was made, it represented a roughly 7.5 percent premium. Because of falling stock prices, however, the bid now represents about a 4 percent premium.
Analysts have speculated that USA Interactive might be willing to increase the bid based on Expedia's performance, even though the company has said it does not intend to do so.
"Unless Expedia somehow remains an independent, publicly traded company, it likely will be bought by USAI at the proposed exchange ratio or at a more favorable exchange ratio," Legg Mason analyst Thomas Underwood said last month.