March 12, 2005

LOS ANGELES, February 24, 2005 (Reuters) - Web travel service provider Expedia expects to use acquisitions to expand its business outside the United States and will have the cash and stock as an independent company to make those deals, the company's chief executive said on Wednesday.

Expedia, the Internet travel business of IAC/InterActiveCorp, will be spun off from IAC and become an independent public company by June, Chief Executive Dara Khosrowshahi said in an interview at the Reuters Hotels and Casinos Summit in Los Angeles. [email his photo]

Once that happens, he said, investors will see Expedia as more of a pure-play travel company, one that intends to expand its reach around the world.

"We could certainly see big deals, but big deals don't come by too often," he said. "Our tendency would be more to the geographic right now."

Among the areas the company will focus on, he said, are Asia, especially markets like Japan and China. Emerging markets like India are further off, Khosrowshahi said.

But wherever Expedia decides to shop, he said it would have ample resources to do deals.

" We have plenty of choice out there. We will have considerable access to capital," he said. "To the extent that we do deals, we would be buying travel companies so we could use stock and cash."

IAC Travel, the segment of the company that includes Expedia, reported revenue of $496.5 million in the fourth quarter, up 11 percent from a year earlier. The segment's operating income before amortization grew 3 percent to $154 million.

Expedia's corporate business is on the upswing as well, with 100 percent growth in the fourth quarter. Khosrowshahi said Expedia Corporate Travel should turn profitable in 2005, though the company will remain focused on growth rather than profit in that business until next year.

BLOCKING METASEARCH

Some see travel "metasearch" sites as competition to established travel vendors like Expedia, since they can aggregate prices and deals from various travel pages.

But Khosrowshahi said Expedia would not allow such sites to "scrape" Expedia for that information.

" If they want to be fugitives of the law I guess they can," he said, adding that such sites would be increasingly limited in the data they can offer. "We think from that perspective the metasearch proposition isn't too much of a proposition."

And as for soon-to-be-former parent IAC, Khosrowshahi said the two companies would have a close relationship, with a number of exclusive deals between them. After the split IAC will still hold businesses like Ticketmaster and Home Shopping Network.

Billionaire mogul Barry Diller will continue to run IAC after the split but will also serve as executive chairman of Expedia.

" He will be involved in every decision on a daily basis," said Khosrowshahi, who had been the CFO of IAC until taking over the travel unit last November.

Shares in IAC surged after the split was announced last December but have since shed about 15 percent of their value.

Sent by Sanaz Khalaj

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