For a sum of US$ 300 Million, Liberty Interactive Corporation has taken a voting control of Online Travel Agent (OTA) TripAdvisor from Barry Diller and the Diller-von Furstenberg Family Foundation. As part of the upper management reshuffle, Bary Diller has resigned as Chairman of the Board of Directors and as Senior Executive of TripAdvisor, but will continue serving as a director of TripAdvisor.
TripAdvisor was earlier in the hands of Diller’s InterActiveCorp (IAC) since 2004. Interestingly, other OTA Expedia too, was under the IAC group. TripAdvisor’s growth story has been without any significant hurdles exclaimed Barry Diller, “Ever since we acquired TripAdvisor in 2004 it’s been one of the smoothest and most trouble-free growth stories I’ve ever known. During that time it grew from a startup with $23 million in annual revenues to a $5 billion plus public company with a global brand that operates the world’s largest travel site.”
Liberty Interactive has been on the board of TripAdvisor for quite some time & have merely taken the voting control explained Greg Maffei, President and CEO Liberty, “We are pleased to take voting control of our longstanding stake in TripAdvisor. TripAdvisor is an established leader in the travel industry and our increased investment in the company is a strong addition to our portfolio”
Why the change?
While Barry Diller may just have owned just 3% of the company, he was able to win such a premium, thanks to a proxy he held, it allowed him to vote Super-voting stock in TripAdvisor. In simpler words, Mr. Diller was able to supersede any decision made by the board. Perhaps it was considered detrimental to the growth of the company & hence Liberty Interactive chose to buy their way to the super-voting position. Post the exchange, Liberty will now own 22% of the equity in TripAdvisor and control 57% of the total votes.
It is one of the best times to be in the online travel business. With technology improving, people are ready to punch in tickets without having to leave their chairs. This convenience has propelled the usage of these site to never before seen heights. TripAdvisor currently is a US$ 5 Billion+ company. Hence the amount seems chump change to get controlling stake. What do you think?