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Expedia Group on Thursday said it appointed Peter Kern CEO, secured $3.2 billion in financing from two prominent private equity companies, and announced that it will be implementing furloughs and reduced work hours.

The company also stated that it will stop issuing dividends to shareholders until its business recovers from the coronavirus crisis, and it will apply for governmental relief monies in various countries where feasible “to support employees.”

Kern, who will continue to serve as vice chairman of the Expedia Group board, was running the company with chairman and senior executive Barry Diller since then-CEO Mark Okerstrom was ousted in early December.

The company also announced that Eric Hart will become Expedia Group’s chief financial officer.

The financing announced Thursday is for $3.2 billion, including $1.2 billion in preferred stock, and $2 billion in debt financing. The equity investment comes from Apollo Global Management and Silver Lake, and is larger than the $1 billion that the Wall Street Journal reported had been under discussion earlier this week.

However, Skift reported Tuesday based on an earlier report that the financing would likely be more than $1 billion, although we said it would likely come in stages.

The equity announced as part of the financing will be “non-voting and non-convertible preferred stock,” Expedia stated.

David Sambur, who is the co-lead partner of Apollo’s private equity practice, and Silver Lake Co-CEO and Managing Partner Greg Mondre will join the Expedia Group board once the deal closes. That’s expected to be May 5.

“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 private equity partner at Apollo, as part of the financing announcement.

Expedia Group said the deal is geared to give it financial flexibility, and to enhance its liquidity position as it works to get through the coronavirus crisis.

Silver Lake, which years ago took Sabre Holdings private, was one of two investors that invested $1 billion in Airbnb a couple of weeks ago.

Selling Off Brands?

There has been speculation in December when Okerstrom departed that a reorganized Expedia would look to sell non-core brands, With the coronavirus flaring, that talk has picked up in recent days with chatter that Expedia Group would have to sell off brands and assets such as Egencia, Trivago, Despegar and Traveloka in order to survive the coronavirus crisis.

Some of these asset sales still could take place, but when the $3.2 billion financing deal closes in May then that liquidity pressure should be reduced.

Peter Kern Was the Favorite to Get the Job

It wasn’t a big surprise that Diller and the Expedia board turned to Vice Chairman Peter Kern to take on the CEO role. Kern had effectively been running the company on an interim basis since Okerstrom’s exit in December.

In the interim, Diller and Kern have been engaged in retooling Expedia Group by reorganizing it internally, laying off 12 percent of the staff globally, and they had pledged to reduce the company’s annual run rate by around $500 million in 2020, although those goals were announced before the pandemic struck.

The process of appointing Kern has parallels to that of naming Okerstrom as the new Expedia Group CEO when he replaced Dara Khosrowshahi in that position in August 2017.

At that time, Diller said he hadn’t conducted an external search to replace Khosrowshahi as there was really only one candidate he considered. That was Okerstrom, who when then-chief financial officer, and had played an integral role in Expedia acquiring Travelocity, Orbitz, and HomeAway, among other companies, in 2015 when Exoedia went on a buying spree.

In appointing Kern as the new CEO on Thursday, Expedia Group didn’t hire an executive search firm — a process that Diller doesn’t hold in high regard — although he may have considered external and internal candidates. Still, Diller’s obviously very comfortable with Kern, who has been an Expedia Group board member since 2005 and has served as vice chairman since 2018.

Kern has been a steady force at the company throughout the process since December when Expedia Group fired 12 percent of its workforce, and make stiff cost cuts. Kern was most recently CEO of Tribune Media and has plenty of private equity — namely cost-cutting and investing — experience.

As part of his appointment announcement, Kern, along with Diller, won’t take any compensation for the rest of 2020, and Expedia’s leadership team is taking 25 percent salary reductions.

Furloughs

Expedia Group wouldn’t comment on the number of employees it will furlough. Expedia did say that it will continue to provide healthcare benefits for furloughed employees; others are on reduced work weeks or on voluntary leaves.

The company, though, is suspending all 401-K matching programs for employees in the U.S. for the remainder of 2020.

The furloughs are in effect through August 31 “when we will reevaluate the situation and hope to be in a better position with volumes coming back and plenty of work to keep us all busy,” Expedia said.

Photo Credit: Peter Kern was appointed CEO of Expedia Group Expedia Group