Expedia Shares Gain After Silver Lake, Apollo Global Take $1.2 Billion Stake

Expedia said the private equity stake sale is "part of a comprehensive strategy to enhance Expedia Group's financial flexibility and strengthen its liquidity position."

Expedia Group Inc.  (EXPE) - Get Report said Thursday that private equity groups Apollo Global and Silver Lake have taken a $1.2 billion stake in the company as it raises fresh capital ahead of an extended shutdown for the travel booking website.

The two private equity groups will provide 'anchor funding' for Expedia in the form of perpetual preferred shares, the company said, while it also plans to raise around $2 billion in additional debt financing. Expedia also said it will furlough workers until at least  the end of August, cease 401(k) matching contributions for employees and suspend the group dividend. Senior management will also take a 25% pay cut for the balance of the year, the company said.

"We've learned such an enormous amount over these almost five months – we're going to put that to great and definitive use as we come out of this period" said Expedia chairman Barry Dilller. "I believe we'll have a far finer operation coming out of this crisis than going into it."

"I wanted our shareholders, employees and the public to have the most comprehensive outline of all that has happened during this period of existential uncertainty," he added. "We have the financing to carry us through, a superb newly named senior management team, and a very clear focus for whatever the future brings."

Expedia shares were marked 5.7% higher in early trading following the Apollo and Silver Lake investment announcement to change hands at $64.86 each.

Expedia also named a new CEO, current vice chairman Peter Kern, and said David Sambur, co-lead partner of Apollo's private equity business, and Greg Mondre, co-CEO and managing partner of Silver Lake, will join the company's board.

Expedia, TripAdvisor  (TRIP) - Get Report, Booking Holdings  (BKNG) - Get Report and other travel-related businesses were among the first and hardest hit by the pandemic, with demand for flights, cruises and other travel-related services falling dramatically throughout March. 

Expedia generated about $12 billion in revenue last year, but has seen its sales evaporate amid global travel restrictions and stay-at-home orders tied to the pandemic.

The company underwent a major restructuring in late February, laying off 3,000 workers as the coronavirus began to curb global travel in and out of Asia.