Expedia Plans to Split Out TripAdvisor As Separate Public Company

Bellevue, Wash.-based Expedia has approved a plan that would break the company into two publicly traded companies that essential turns one into a travel agency and another into a media company.

The first company would essentially be TripAdvisor. It would include the properties that provide domestic and international reviews of hotels. The second company would be include Expedia’s lengthy list of travel agency brands, such as Expedia.com, Hotels.com, eLong, Hotwire, Egencia, its Affiliate Network, CruiseShipCenters, Venere, Classic Vacations and carrentals.com.

In after hours trading, the company is up $2.63, or nearly 12 percent, to trade at $25.03 a share.

The company said in a release that it anticipates the transaction to be completed by the third quarter.

The deal would take the form of a distribution of stock of TripAdvisor to
Expedia stockholders or a reclassification of Expedia stock, with the holders of Expedia stock receiving a proportionate amount of TripAdvisor stock.

The transaction would mirror Expedia’s dual-class equity capital structure
between Barry Diller and Liberty Media.

Expedia said the decision is still pending a number of conditions including final approval by Expedia’s board and a shareholder vote.

Expedia purchased Trip Advisor in 2004 for $237 million. TripAdvisor makes money from advertising as well as from affiliate fees when users book through other sites, such as Priceline or Orbitz.

Expedia likely feels the value of TripAdvisor is not being recognized in its stock price. In 2010, TripAdvisor’s revenues totaled TripAdvisor $486 million.

In February, Expedia said it believes its advertising and media business will reach $1 billion in revenue with TripAdvisor leading the way.