Credit Market Woes Killing Expedia's Buyback Ambitions (EXPE, OWW, TZOO, PCLN)

Expedia (NASDAQ:EXPE) is showing that credit market woes (and probably online travel stock weakness) aren’t limited to its competitors.  The company came clean this morning by saying it is decreasing its number of shares sought in a tender offer.  The reason couldn’t be worse: due to the lack of available financing at satisfactory terms as a result of current conditions in the credit markets.  This could all be part of the tie-in and part of the reason that no one wanted Orbitz Worldwide (NYSE:OWW) shares last week, and you know the Travelzoo (NASDAQ:TZOO) weakness in its outlook probably didn’t help matters here.

Expedia’s amended "Dutch tender" offering is to purchase up to 25,000,000 shares of its common stock at a price per share not less than $27.50 and not greater than $30.00.  This now represents approximately 9% of the number of shares of common stock currently outstanding and approximately 8% fully diluted. The tender offer is set to expire on August 8, 2007. This is a huge disappointment.

Shares rocketed much more than 10% back in June after the company said it was buying back up to $3.5 Billion in stock.  This was to represent 116.7 million shares at the time of the announcement, so 25 million now is going to be deemed paltry in comparison.  This even has Priceline.com (NASDAQ:PCLN) shares indicated down almost 1% on thin volume in early indications.  Shares of Expedia are down 6% at $27.50 in pre-market indications. 

Jon C. Ogg
July 23, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.