Press Release: USA Interactive
May 31, 2002
NEW YORK, NY -- USA Interactive (Nasdaq: USAI) announced today an agreement to purchase Interval International
("Interval") through the acquisition of its holding company, Interval Acquisition Corp., from Willis
Stein & Partners, a Chicago-based private equity investment firm, and other investors, for approximately $578
million. The consideration will be paid in cash (50%) and shares of USA common stock (50%), with the number of
shares being issued based on USA's stock price prior to closing, and with USA having the option to pay all cash.
This represents a multiple of approximately 10 times Interval's budgeted 2003 EBITDA, and is expected to be accretive
to USA's 2003 EBITDA and cash earnings per share. USA's contemplated 2003 forecast for Interval is $220 million
of revenue and $60 million of EBITDA.
Miami-based Interval is one of the world's leading membership-services companies, providing timeshare exchange
and other value-added programs to its timeshare-owner consumer members and resort developers. The combination of
long-term relationships with developers and annual membership-based revenues provides Interval with strong recurring
earnings.
Interval joins USA's formidable interactive commerce portfolio and enhances USA's growing dynamic exchange and
interactive travel businesses, which include controlling interests in Ticketmaster (Nasdaq: TMCS - News), which
operates Match.com and Citysearch; Expedia, Inc. (Nasdaq: EXPE - News); and Hotels.com (Nasdaq: ROOM - News); as
well as TV Travel Group and the forthcoming U.S. cable travel network.
Through this acquisition, Interval will be able to draw from USA's vast experience in advancing the online migration
of traditional businesses, specifically exchange services in the areas of ticketing and travel, and Interval's
business model is conducive to significant online expansion. In addition to leveraging USA's online expertise,
Interval will be able to use USA's ticketing and local information services to create new benefits programs for
its members. USA's companies will benefit through travel packages that will utilize resort inventory from Interval
and its developer clients.
"Another notch in our belt of interactive services with real revenues, earnings, and strong growth - one in
which online migration over time is assured - and one where many of our current services interrelate providing
all kinds of new opportunities for each other," said Barry Diller, Chairman and Chief Executive Officer, USA
Interactive. "We welcome the expertise of Interval's excellent management team, led by its CEO Craig Nash,
into our USA Interactive group of companies."
"We are excited about the potential that leveraging USA Interactive's unique assets and distribution channels
holds for the future of timesharing and our company," said Craig M. Nash, Chairman and Chief Executive Officer
of Interval. "As a strategic component of USA's transaction-based services, we will continue to complement
our developer clients' business while adding even greater value to our consumer member families."
Interval derives revenues primarily from fees paid by consumers and developers for membership, exchange, reservation
services and other travel related products, and does not build or sell timeshare properties. Typically, a timeshare
owner purchases access to a fully furnished condominium for one week per year in perpetuity. The timeshare appeal
is that consumers can purchase future vacations at current prices and maintain the rewards of a second home while
eliminating the burden of year-round ownership. The average price of a timeshare is approximately $15,000.(a)
Vacation exchange adds flexibility to the timeshare experience and has been a key factor in driving the growth
of the industry. Through Interval, timeshare owners can trade the vacation week they own for a different week or
resort. Consumers consistently cite the ability to exchange as very important to the timeshare purchase decision.
Interval also provides programs designed to complement its resort developer clients' efforts through a broad range
of marketing, sales, and operational services.
It is expected that the transaction will be completed in the third quarter of this year, subject to customary regulatory
approvals, and that Interval's management team will continue to run the company.
About Timesharing(a)
The timeshare business is the fastest-growing segment of the hospitality industry. Globally, new purchases of timeshares
approach $7 billion annually, with over 5 million households owning at more than 5,000 resorts. In the U.S. alone,
3.2 million families currently own timeshare, taking some 4 million vacations at 1,800 resorts.
Timesharing has demonstrated its resiliency during past periods of economic downturn and international tension.
Despite the post-September 11 impact on tourism, the industry's performance indicates a continuation of strong
usage and exchange activity.
About USA Interactive
USA Interactive (Nasdaq: USAI), via the Internet, the television, and the telephone, engages in the worldwide business
of interactivity across electronic retailing, travel services, ticketing services, personals services, local information
services, and teleservices. USA is comprised of HSN; Expedia, Inc. (Nasdaq: EXPE); Hotels.com (Nasdaq: ROOM); TV
Travel Group; Ticketmaster (Nasdaq: TMCS), which operates Match.com and Citysearch; Precision Response Corporation;
Electronic Commerce Solutions; and Styleclick (OTC: IBUYA).
About Interval International
For more than 25 years, Interval International has led the vacation ownership industry with innovative products
and the highest levels of quality, service, and value. The company has attracted the leading hospitality brands
and independent developers to its global network of more than 1,900 resorts in 75 countries. With its international
headquarters located in Miami, Florida, Interval serves its developer clients and over 1.3 million members through
28 offices in 19 countries and employs approximately 1,700 people worldwide.
About Willis Stein & Partners
Willis Stein & Partners is a leading private equity investment firm specializing in investments in profitable,
well-managed, and growing businesses targeting the consumer products and services, media, telecommunications, business
services, manufacturing, and health care industries. The principals of Willis Stein have made investments in 40
companies and currently manage approximately $2.9 billion of equity capital.
Important Disclosures
This press release contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include the information relating to possible or assumed future results
of operations of USA and its subsidiaries and Interval, including those preceded by, followed by or that include
the words "believes," "could," "projects," "budgets," "estimates,"
"intends," "expects," "anticipates" or similar expressions. These statements reflect
the current views of USA and Interval with respect to future events, and are based on information currently available
to USA and Interval. These forward-looking statements are subject to risks, uncertainties and assumptions that
may affect the operations, performance, development and results of USA's and its subsidiaries' and Interval's business.
The following important factors, in addition to those described in USA's and its subsidiaries' filings with the
Securities and Exchange Commission, could affect the future results of USA and Interval and the other subsidiaries
of USA described in this press release, and could cause those results to differ materially from those expressed
in the forward-looking statements: material adverse changes generally or in economic conditions in the markets
served by our businesses; future regulatory actions and conditions in our businesses' operating areas; competition
from others; successful integration of our divisions, including recently acquired businesses; product demand and
market acceptance; the ability to protect proprietary information and technology or to obtain necessary licenses
on commercially reasonable terms; the ability to expand into and successfully operate in foreign markets; and obtaining
and retaining key executives and employees. You are cautioned not to place undue reliance on these forward-looking
statements, which are made as of the date of this press release. USA and Interval undertake no obligation to update
or revise the forward-looking statements contained in this press release, whether as a result of new information,
future events or any other reason.
Source:
(a) American Resort Development Association (ARDA), 1999.
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Contact:
USA Corporate Communications
Ron Sato, 212/314-7254
or
USA Investor Relations
Roger Clark/Lauren Rosenfield, 212/314-7400
or
Interval International
Chris Boesch, 305/666-1861 ext. 7267
or
Willis Stein & Partners
Dan Blumenthal, 312/422-2410