8-KLeadership ChangesAcquisitions & DispositionsMaterial Agreements+4

Expedia Group, Inc. 8-K Report, Material Agreement (Dec 27, 2011)

Filed December 27, 2011For Securities:EXPE

Summary

Expedia, Inc. (EXPE) filed an 8-K on December 27, 2011, to announce the completion of its spin-off of TripAdvisor, Inc. (TRIP) on December 20, 2011. This significant event separated Expedia's core travel transaction businesses from its TripAdvisor Media Group operations, creating two independent, publicly traded companies. The spin-off was effected through a reclassification of Expedia's capital stock, with a one-for-two reverse stock split preceding the distribution of TripAdvisor shares. In conjunction with the spin-off, Expedia and TripAdvisor entered into several material agreements, including a Separation Agreement, Tax Sharing Agreement, Employee Matters Agreement, and Transition Services Agreement, to govern their post-spin-off relationship. Additionally, Expedia entered into an Amended and Restated Governance Agreement with Liberty Interactive Corporation and Barry Diller, which outlines Liberty's director nomination rights and specific consent rights for certain material transactions, contingent on ownership levels. The report also details the redemption of Expedia's 8.5% senior notes due 2016 and adjustments to outstanding warrants.

Key Highlights

  • 1Completion of the spin-off of TripAdvisor, Inc. (TRIP) on December 20, 2011, creating two independent public companies.
  • 2Execution of key separation agreements (Separation, Tax Sharing, Employee Matters, Transition Services) between Expedia and TripAdvisor.
  • 3Restructuring of the Governance Agreement with Liberty Interactive Corporation and Barry Diller, including Liberty's board nomination rights.
  • 4Implementation of specific consent rights for Liberty and Barry Diller on certain material transactions for Expedia, subject to ownership thresholds.
  • 5Redemption of Expedia's $400 million aggregate principal amount of 8.5% senior notes due 2016.
  • 6Release of TripAdvisor entities from guarantees on Expedia's existing credit facilities and senior notes.
  • 7Adjustments to outstanding Expedia warrants to reflect the reverse stock split and distribution of TripAdvisor shares.

Frequently Asked Questions

This 8-K filing serves to report the material events related to the completion of Expedia's spin-off of TripAdvisor, Inc. It details the structure of the separation, the key agreements entered into between the two new entities, and changes in governance and financial obligations.

Expedia and TripAdvisor entered into a Separation Agreement, a Tax Sharing Agreement, an Employee Matters Agreement, and a Transition Services Agreement. These agreements define the operational, financial, and legal framework for their ongoing relationship as separate companies.

The amended Governance Agreement grants Liberty Interactive Corporation specific rights to nominate directors to Expedia's Board based on its equity ownership. It also outlines 'Contingent Matters' where Expedia requires prior approval from Liberty and/or Mr. Diller for certain significant transactions, provided certain ownership and role conditions are met.

Expedia redeemed its entire $400 million aggregate principal amount of 8.5% senior notes due 2016 on December 20, 2011, prior to the spin-off. This was funded partly by a dividend received from TripAdvisor.