Expedia is planning its return trip. The online travel company, owned by Microsoft before it was spun into a public company in 1999, is to become — once again — a Bellevue-based...
Expedia is planning its return trip.
The online travel company, owned by Microsoft before it was spun into a public company in 1999, is to become — once again — a Bellevue-based company.
For reasons of “simplicity and clarity,” IAC/InterActiveCorp said it plans to split its collection of Internet businesses in two and run a publicly traded travel unit in Bellevue under the Expedia brand name.
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IAC, which runs some 40 Internet businesses as varied as Expedia, Match.com and LendingTree, said it decided to spin off its travel group to give it room to grow, while shedding light on its other, smaller properties.
“We’ve got some really terrific little growth businesses, but nobody wants to hear about those in this context,” said IAC Chairman and Chief Executive Barry Diller of the company’s current structure. “More than anything, those are the things that spurred us to do this.”
The travel business, to be headquartered in Expedia’s Bellevue offices, would include Expedia.com, Hotels.com and discount-travel site Hotwire. IAC’s travel operations have more than 6,000 employees, and spokeswoman Deborah Roth said the spinoff “will in no way affect those numbers.”
IAC would continue to run its online ticketing, retail, financial and online dating services, including Match.com, Evite, HSN and Ticketmaster.
The deal is expected to close by June 30.
Since 2003, the Internet conglomerate has run Expedia and its other businesses under one publicly traded umbrella, reasoning the move would simplify its interests into one currency.
With the announcement, IAC concedes its grand vision of an Internet-style General Electric didn’t work. Wall Street found the business too complex to value, sending IAC’s stock down in the process. IAC’s shares have fallen 23.7 percent in the past year.
If the whole was worth less than the sum of its parts, yesterday’s announcement demonstrates Expedia has remained the engine.
Begun in 1995 within the walls of Microsoft, Expedia spun off from its parent company in November 1999, eventually surpassing Travelocity as the largest online travel site.
Expedia shed its ties to Microsoft in July 2001, when IAC announced it would buy the software giant’s majority stake in the company.
In March 2003, IAC bought Expedia’s remaining outstanding shares, removing one of the Internet sector’s strongest-performing stocks.
Some analysts lamented the move, saying Expedia was worth more as a stand-alone stock.
William Blair & Co. leisure analyst Bob Simonson likened it to taking a piece of prime beef and chopping it up into little pieces to use in Hamburger Helper.
“It truly was a mistake to put it together the way that he did,” Simonson said. “If that assessment is correct, then undoing it should prove to be a positive.”
While the travel unit would be run under the Expedia name, each business will continue to operate as a stand-alone unit, passing customer traffic back and forth “to the extent that it benefits the customer,” said IAC spokeswoman Andrea Riggs.
Each of IAC’s travel companies serves different segments of the market. Hotwire appeals to price-conscious travelers willing to fly during off-peak hours to save money, while Hotels.com primarily captures those who travel to their destination by car.
Classic Custom Vacations serves the luxury-vacation market, while Expedia serves the mainstream traveler buying airfare, hotel rooms and other services together.
Diller will remain chairman and CEO of IAC and will serve as chairman of Expedia.
Dara Khosrowshahi, who was to become president and CEO of IAC Travel on Jan. 1, will now serve as Expedia’s CEO.
Diller says he thinks the new structure will energize its businesses. “Standing alone, they would be able to grow any which way,” he said.
IAC’s stock rose $1.53, or 6 percent, on the news, closing yesterday at $27.41 a share.
Monica Soto Ouchi: 206-515-5632 or firstname.lastname@example.org