The real winner in the TripAdvisor stake sale is — surprise, surprise — Barry Diller
The Liberty Media-Barry Diller deal for control of TripAdvisor is all about profits and taxes, and not about a change in strategic direction for the hotel-review site.
Don’t expect Liberty Media’s new controlling stake in TripAdvisor to trigger any big operational changes any time soon.
Although Barry Diller ceded power to Liberty Media, which will name a new chairman of TripAdvisor, Diller remains a TripAdvisor director, as do Expedia CEO Dara Khosrowshahi and Expedia vice chairman Victor Kaufman. Liberty Media has been a long-time investor in Expedia, and TripAdvisor since the late 2011 spinoff.
That being said, one TripAdvisor competitor mused: “The Liberty people are smart as hell. The CEO, Greg Maffei, was the CFO of Microsoft when they IPOed Expedia so he knows the space.”
One financial analyst, who declined to be identified, characterized the Liberty Media purchase of 4.8 million shares of common stock from Diller at $62.50 per share as a complex financial transaction, accomplished most likely because Diller wanted to sell and Liberty Media seeks to effectively monetize its TripAdvisor asset for tax purposes.
One thing’s for certain: Priceline’s pending $1.8 billion acquisition of Kayak at $40 per share, or at a 29% premium over the stock’s previous close before the deal was announced, didn’t hurt the share price that Diller got for unloading TripAdvisor stock.
Liberty Media is paying Diller $62.50 per share, which amounts to a 62.8% premium over TripAdvisor’s close at $38.30 on December 10.
“The winner is Barry Diller,” the financial analyst says, noting that Liberty Media coveted Diller’s voting rights. “And, maybe Liberty knows something that we don’t know.”
There are still so many incestuous ties between Expedia and TripAdvisor as Liberty owned a 26% chunk of Expedia Inc. common stock at the end of 2011, for example.
Expedia’s CPC buys accounted for $211 million, or 33%, of TripAdvisor’s revenue in 2011, and that media buying was expected to fall 10% to 15% in 2012.
Meawhile, the Liberty Media coup at TripAdvisor comes at perhaps a watershed moment for TripAdvisor and its former parent a year after the spinoff.
TripAdvisor and Expedia entered into a commercial agreement covering Expedia.com and Hotels.com around the time of the spinoff on December 21, 2011, and that agreement expires this month.
At least Diller won’t be negotiating with himself this time around as the deadline approaches to renew the commercial agreement.
Tom White of Macquarie Equities Research concurs that the Liberty Media transaction with Diller doesn’t portend operational changes, and wonders about its timing.
Although Diller cited time constraints for his reason to downplay his role at TripAdvisor, White writes in a research note, “investors will likely debate why the transaction occurred now. We can’t say we have any insight into the precise timing of the deal, but don’t expect any meaningful change to TRIP’s strategy or execution as a result of reduced involvement from Diller (notably, Liberty had two members on TRIP’s board prior to the deal).”
White believes that TripAdvisor CEO Stephen Kaufer “will continue to be the key decision-maker at the company…”