Tripadvisor soars in pre-market on $435 mln deal to buy Liberty TripAdvisor

Investing.com -- Shares of Tripadvisor (NASDAQ:TRIP) jumped more than 8% in pre-market trading on Thursday after the online travel agency said it would buy Liberty TripAdvisor Holdings (OTC:LTRPA), Inc. (OTC:LTRPB) in a deal valued at about $435 million.

This transaction, expected to close in the second quarter of 2025, aims to simplify Tripadvisor's capital structure and reduce its outstanding share count.

Under the terms of the deal, Tripadvisor will acquire all of Liberty TripAdvisor's outstanding shares, which include Series A and Series B common stock. 

The common stock will be converted into the right to receive $0.2567 per share in cash, totaling around $20 million. 

Additionally, Liberty TripAdvisor’s 8% Series A Cumulative Redeemable Preferred Stock will be converted into cash and Tripadvisor common stock, with the preferred shareholders set to receive about $42.5 million in cash and 3.04 million shares of Tripadvisor stock.

Liberty TripAdvisor’s Exchangeable Senior Debentures, valued at about $330 million, will also be repaid in line with their terms.

One of the key aspects of this deal is Tripadvisor’s plan to retire nearly 27 million shares of its common stock currently held by Liberty TripAdvisor. 

This move is seen as effectively a repurchase of Tripadvisor's stock, with the implied price per share for the transaction standing at $16.21. This represents a premium of about 16% based on Tripadvisor's 10-day average share price as of December 17. 

As a result of the transaction, Tripadvisor will simplify its corporate structure by eliminating the dual-class share system, which had given Liberty TripAdvisor a controlling stake in the company. 

“The transaction presents a unique and favorable opportunity to simplify our capital structure, create strategic flexibility, and retire a large portion of our shares, while maintaining a healthy balance sheet,” said Tripadvisor’s president and CEO, Matt Goldberg in a statement.

The deal has been approved by the boards of both companies and was unanimously recommended by Tripadvisor’s Special Committee, which was composed of independent directors. 

However, the transaction remains subject to customary closing conditions, including the approval of a majority of Liberty TripAdvisor’s stockholders. 

If the deal does not close by March 27, 2025, Tripadvisor has agreed to provide a loan to Liberty TripAdvisor to help manage any remaining obligations related to its Exchangeable Debentures.