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USAi Wins with Tickets, Not Travel

USA Interactive reached a deal to fold its Ticketmaster unit into the
corporate parent, but it said a similar deal proposed for its holdings in
travel-related online services LP ( and
Expedia Inc. (
has been scrapped.

USAi had proposed acquiring the shares it did not already own of the three
online companies in exchange for USAi stock June 3. At the time, and
Expedia balked at the deal because they felt that it did not represent an
adequate premium. Both companies formed special committees to look into the
matter in June when it was first proposed.

In statements, special committees for both companies said USAi's decision to
terminate the acquisition 'will clear up the uncertainty regarding the proposed
exchange offer.'

Shareholders apparently agreed. Shares of were up 12 percent, or
$5.19 per share in 4 p.m. trading Thursday, to $47.85 each, while Expedia shares
surged 9 percent, or $3.76 each, to $43.43.

Ticketmaster rose the most -- 26 percent, or $3.35 per share, to $15.95 on
the news.

According to the agreement, Ticketmaster shareholders would receive 0.935
shares of USAi common stock for each share of Ticketmaster common stock they
own. Based on Wednesday's closing prices, the transaction values Ticketmaster at
$15.17 per share.

That deal is slightly higher than what USAi proposed in June -- 0.8 shares of
USAi common stock for each Ticketmaster share.

USAi plans to issue about 45 million shares as part of the deal, which is
expected to close by the end of the year. USAi currently owns 66.5 percent of
Ticketmaster shares and controls about 93 percent of the voting power of the

In a conference call Thursday morning, USAi chairman Barry Diller said
offering a large premium for the Expedia and shares would have been

'There was no energy to put a transaction together with either of them,'
Diller said on the call. 'It takes energy to do this kind of transaction.'

Diller said the relationship with Expedia and is still good, and
the inability to complete a deal in no way reflects a lessening of enthusiasm
for the travel sector.

'Our faith in the growth of interactive travel services over the long term is
complete,' he added.