Filed by Expedia, Inc.
Pursuant to Rule 165 and Rule 425
under the Securities Act of 1933
Subject Company: Expedia, Inc.
Commission File No. 000-27429
This document contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, including statements regarding our expectations, beliefs, intentions or
strategies regarding the future. Forward looking statements may be identified by
the word "will" in this document. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may differ materially from these expectations due
to changes in global economic, business, competitive market and regulatory
factors or failure of the transactions described to be completed for any reason.
We have based all of our forward-looking statements on information available to
us as of August 14, 2001 and we are not obligated to update any of these
forward-looking statements. You should note that our actual results could differ
materially from the forward-looking statements.
USA Networks, Inc. ("USA") and Expedia, Inc. ("Expedia") will file a joint
prospectus/proxy statement and other relevant documents concerning USA's
acquisition of Expedia with the Securities and Exchange Commission ("SEC").
INVESTORS ARE URGED TO READ THE JOINT PROSPECTUS/PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS FILED OR TO BE FILED IN THE FUTURE WITH THE SEC BECAUSE THOSE
DOCUMENTS CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain such
documents free of charge at the SEC's website at www.sec.gov. In addition, such
documents may also be obtained free of charge by contacting USA Networks, Inc.,
152 West 57th Street, New York, New York, 10019, Attention: Investor Relations,
or Expedia, Inc., 13810 SE Eastgate Way, Suite 400, Bellevue, WA 98005,
Attention: Investor Relations. INVESTORS SHOULD READ THE JOINT PROSPECTUS/PROXY
STATEMENT CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR
INVESTMENT DECISION.
USA and its directors and officers may be deemed to be participants in the
offering of securities by USA, and Expedia and its directors and officers may be
deemed to be participants in the offering of securities by Expedia as well as in
the solicitation of proxies from Expedia shareholders to adopt the agreement
providing for USA's acquisition of a controlling interest in Expedia. A detailed
list of the names and interests of USA's directors and executive officers is
contained in the definitive proxy statement on Schedule 14A filed by USA with
the SEC on April 9, 2001, and a detailed list of the names and interests of
Expedia's directors and executive officers is contained in the definitive proxy
statement on Schedule 14A filed by Expedia with the SEC on October 11, 2000.
Copies of those filings may be obtained free of charge at the SEC's website at
www.sec.gov.
* * * *
[THE FOLLOWING IS THE FORM OF AN ARTICLE TO BE POSTED ON EXPEDIA'S WEBSITE AT
WWW.EXPEDIA.COM ON AUGUST 15, 2001 AND WHICH IS INTENDED BY EXPEDIA TO BE
DISTRIBUTED TO EXPEDIA SHAREHOLDERS IN RESPONSE TO QUERIES BY SUCH
SHAREHOLDERS.]
USA Networks Inc. Transaction Summary
-------------------------------------
1. USA Networks, Inc. has agreed to acquire up to 37.5 million shares of
Expedia, Inc. representing approximately 75% of the outstanding Expedia basic
shares. Shares owned by USA will have 15:1 voting rights.
2. Expedia shareholders other than Microsoft Corporation, which has committed
to exchange all its shares, will have the following choices:
- Exchange some or all of their Expedia shares for a package of three USA
securities, described below, subject to a pro rata cutback if holders of
more than 37.5 million Expedia shares elect to receive the USA
securities; or
- Hold their Expedia shares and receive, for each Expedia share held,
0.1920 new warrants to purchase EXPE common shares. These warrants have
a 7-year term and an exercise price of $52 per share and will be
registered securities.
3. Holders of outstanding Expedia warrants and vested Expedia stock options
also have the above choice if they timely exercise their warrants/options for
Expedia shares.
4. Holders of outstanding Expedia warrants and vested Expedia stock options
who do not timely exercise and holders of unvested Expedia stock options will
receive 0.1920 new Expedia warrants for each warrant/option share.
5. Microsoft Corporation has agreed to exchange all of its 33.7 million shares
and warrants for the package of USA securities, subject to the pro rata cutback.
6. USA will contribute to Expedia media with a fair market value of $15
million per year over 5 years, an option to purchase USA's equity interest in
National Leisure Group, which USA has agreed to acquire, and an option to
purchase a one-third interest in a newly created USA Travel Channel entity.
7. The transaction will be structured as a subsidiary merger, with Expedia as
the surviving entity as a Nasdaq listed majority-owned subsidiary of USA.
8. USA securities offered per Expedia share (exchange one share of EXPE common
for a package of three securities, comprising):
. $17.50 in USA common stock (subject to a collar between $23 and $31 per
share)
. 0.35 shares of new USA convertible redeemable preferred stock:
- 1.99% annual dividend
- Initial exercise price of $33.75 (subject to reduction if average
USA price 10-day prior to conversion exceeds $35.10)
- 20-year term with 10 year no-call provision
- Can be put to USA (for face value plus accrued and unpaid
dividends) in years 5, 7, 10 and 15
- Dividends, puts or calls paid in cash or USA common stock, at USA
election
. Between 0.3873 and 0.4524 of new 7-year warrants (depending on USA
common stock price in a pricing period prior to closing) to acquire
shares of USA common stock at an exercise price of $35.10 per USA common
share.