8-KLeadership ChangesCorporate ChangesRegulation FD+2

Expedia Group, Inc. 8-K Report, Change in Control (Jul 26, 2019)

Filed July 26, 2019For Securities:EXPE

Summary

This 8-K filing by Expedia Group, Inc. (EXPE) on July 26, 2019, primarily announces the completion of a significant "Combination" transaction. This transaction involved the merger of Liberty Expedia Holdings, Inc. (LEXPE) into Expedia Group. As a result of this merger and related agreements, Expedia Group is no longer considered a controlled company under NASDAQ rules, which will necessitate future compliance with majority independent director requirements. The filing also details the termination of prior shareholder and governance agreements, the settlement of outstanding convertible debentures, and changes to the board of directors. Investors should note the substantial share exchange and the potential for Barry Diller to increase his voting power through a new governance agreement. The completion of the "Combination" represents a material event for Expedia Group. Key changes include the termination of the Diller Proxy, which previously granted Barry Diller significant voting control over shares held by LEXPE. This termination leads to Expedia no longer being a controlled company, aligning with NASDAQ's requirements for independent board representation and committee composition over time. Furthermore, the merger involved a significant exchange of LEXPE shares for Expedia common stock, with an exchange ratio of 0.36. The filing also addresses the redemption and potential exchange of $400 million in LEXPE's 1.0% Exchangeable Senior Debentures, which will be handled by Expedia's subsidiary, Merger LLC.

Key Highlights

  • 1Completion of the "Combination" transaction between Expedia Group and Liberty Expedia Holdings, Inc. (LEXPE) effective July 26, 2019.
  • 2Termination of prior shareholder agreements, including the "Diller Proxy," resulting in Expedia Group no longer being a controlled company under NASDAQ rules.
  • 3Expected future requirement for Expedia Group to comply with NASDAQ rules regarding independent directors on its Board and committees.
  • 4Redemption of $400 million in LEXPE's 1.0% Exchangeable Senior Debentures due 2047 by Merger LLC, with a redemption date of August 26, 2019.
  • 5Exchange of LEXPE shares for Expedia common stock at an exchange ratio of 0.36 shares of Expedia for each share of LEXPE.
  • 6Establishment of a Nominating Committee of the Board with appointed members Craig Jacobson, Chelsea Clinton, and Dara Khosrowshahi.
  • 7New Governance Agreement grants Barry Diller a "Purchase/Exchange Right" to acquire up to 7.3 million shares of Company Class B Common Stock, potentially increasing his voting power.

Frequently Asked Questions

The "Combination" refers to the merger of Liberty Expedia Holdings, Inc. (LEXPE) into Expedia Group, Inc., which was completed on July 26, 2019. This transaction resulted in a significant exchange of shares and changes in corporate governance for Expedia Group.

The termination of the "Existing Stockholders Agreement" and the "Diller Proxy" means that Expedia Group is no longer a "controlled company" under NASDAQ rules. This will require Expedia to bring its board composition and committee structures into compliance with independence requirements over time.

Expedia's subsidiary, Merger LLC, is assuming LEXPE's obligations and will redeem the $400 million aggregate principal amount of 1.0% Exchangeable Senior Debentures due 2047 on August 26, 2019. Holders have the option to exchange these debentures for Expedia common stock until shortly before the redemption date.

The New Governance Agreement provides Barry Diller with a right, exercisable within nine months after the closing of the Combination, to either exchange shares of Expedia Common Stock for or purchase up to 7.3 million shares of Expedia Class B Common Stock. This right allows him to potentially increase his aggregate voting power in Expedia.