Vice Chairman Peter Kern will take the helm of Expedia, which contains Travelocity, Orbitz and Vrbo under its umbrella, and has been without a CEO since last December. Acting Chief Financial Officer Eric Hart will now serve in his role permanently.
Expedia’s former CEO and CFO were ousted in December after a disagreement about the company’s strategy with the rest of its board.
The company agreed to sell about $1.2 billion in equity stake to Silver Lake and Apollo Group Management in a buyout, with representatives from both taking seats on Expedia’s board, according to the company. With travel being stalled due to the coronavirus pandemic, Expedia will also be issuing $2 billion in new debt and doling out cuts to executive salaries, in addition to furloughs for some employees.
The company said its bookings had fallen by around 40 percent Thursday compared to the same time last year.
Silver Lake and Apollo buying out Expedia is an example of a private investment in public equity (PIPE) which can help raise capital through selling off big stakes in the company to companies that take board seats and later become involved in strategy for the company. This deal has been one of the larger PIPE deals as of late.
Silver Lake and Apollo will likely participate in a bond offering launched Thursday (April 23).
Expedia Chair Barry Diller said the company only has one role right now: to conserve cash and keep surviving, using the time to plan for the future when the pandemic isn’t an issue anymore.
Expedia was struggling even before the pandemic, with a hefty rival in Google parent Alphabet that had increasing pull over travel searching.
Expedia shares spiked 7.5 percent Thursday morning at the news. And although the investments mean confidence in the company’s chances, they also mean Expedia has sold preferred shares, which pay dividends at a steep fixed rate of 9.5 percent and gives cause to purchase common stock.
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