Expedia Taps PE for New Capital

Publicly traded Expedia Group will raise approximately $3.2 billion of new capital, consisting of $1.2 billion of perpetual preferred stock and approximately $2 billion in new debt financing. Apollo Global Management and Silver Lake are providing the preferred stock investment.

Expedia Group (NASDAQ: EXPE) is an online travel company with four business segments: Core Online Travel Agencies, Trivago (hotel and lodging), Vrbo (Vacation Rentals by Owner), and Egencia (business travel).

In addition to these segments, other company-owned brands include Orbitz, Travelocity, CheapTickets, Hotwire, Hotels.com, CarRentals.com, CruiseShipCenters, Traveldoo, and SilverRail. Last year, Expedia had revenues of $12.1 billion and EBITDA of $1.9 billion.

This capital raise is being undertaken by Expedia in order to strengthen its balance sheet and enhance its liquidity as the company navigates the COVID-19 pandemic.

“Between the significant steps Expedia Group continues to take to simplify the business, the talented leaders I have gotten to know over the last several months, and this new funding, we are in better position to continue to rise to the current challenge and come out even stronger than before – we understand the financial challenges ahead and we will continue to prudently address those needs,” said Peter Kern, vice chairman and chief executive officer of Expedia. “We are excited to have Apollo and Silver Lake as valued partners in this effort as they share our strong belief in the long-term growth of Expedia.”

David Sambur, co-lead partner of Apollo’s private equity business, and Greg Mondre, co-CEO and managing partner of Silver Lake, will join Expedia’s board of directors upon the closing of these transactions which is expected on May 5, 2020.

“Expedia is a world-class company with an unparalleled collection of online travel brands and access to vast diversified travel supply, and we are thrilled to partner with management and the board to drive its continued growth and innovation,” said Reed Rayman, a partner at Apollo. “This investment helps ensure the company has the resources to sustain market leadership and emerge from the current economic environment stronger than ever.”

Apollo’s (NYSE: APO) private equity funds have acquired more than 150 companies since its founding in 1990 and has more than $331 billion in assets under management. The firm’s latest private equity fund, its ninth, closed in 2017 with more than $24 billion of capital commitments.

Silver Lake invests in technology and technology-enabled industries. The firm has over 100 investment professionals located in Silicon Valley, New York, London, and Hong Kong and has $40 billion in assets under management and committed capital.

J.P. Morgan and Moelis & Company are serving as joint financial advisors and placement agents to Expedia and Wachtell, Lipton, Rosen & Katz is providing legal services.

Private Equity Professional | April 24, 2020

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