Barry Diller's USA Interactive (USAI) just keeps on buying. Less than a week after agreeing to pay $578 million in cash and stock for time-share company Interval International, Diller offered $4.5 billion to buy the minority stakes that USA Interactive doesn't already own in Expedia, Ticketmaster, and Hotels.com.
The bids are part of Diller's strategy to become a bigger player in the TV and online shopping, ticketing, and travel businesses. The company currently runs the Home Shopping Network, and earlier this year launched a Travel Channel on cable to link to its travel Web sites. USA's Ticketmaster is already selling theater tickets to consumers who book travel on Expedia. The offers, valued at a 7.5% premium over the individual companies' stock prices on May 31, could still be rebuffed by the public companies.
And Diller is unlikely to stop buying. With $3.5 billion in cash and securities following the sale of USA's TV studio to Vivendi Universal, Diller has a war chest that he says he will use to build the company through acquisitions. Embattled Edison Schools (EDSN), the nation's No. 1 operator of for-profit schools, secured a crucial lifeline on June 4 when Merrill Lynch and Chelsey Capital agreed to provide it with $40 million in fresh funding. Without it, Edison would have had to pull out of the nation's biggest experiment in school privatization, scheduled to start in Philadelphia this fall. Edison will use most of the money to take over 20 deeply troubled public schools it will operate. Despite the infusion, Edison--which has yet to make a profit in its 10 years--still must prove it is a viable business. Just when it looked like auto sales were going to surge beyond expectations this year, car buyers stalled out in May. Industry sales tumbled 6% last month, with General Motors (GM) and Ford (F) taking the worst hit, each with a 12% decline. Analysts say strong sales in the first quarter may have cannibalized demand in the second quarter. Consumers may also be balking at new charges for options that once were standard on cars. So expect GM and Ford to continue spending on incentives to regain market share. Although GM has vowed to hold its stake of the U.S. market at 28%, it fell to 26% in May. In a bid to enhance its oversight of Fannie Mae (FNM) and Freddie Mac (FRE), the federal agency that regulates the mortgage-finance companies set new corporate governance standards for them. The Office of Federal Housing Enterprise Oversight is insisting that Fannie and Freddie must establish audit and compensation committees for their boards of directors, comply with the New York Stock Exchange's audit rules, and maintain written conflict-of-interest standards. Since Fannie and Freddie already do some of the things the new standards require, the companies said they were generally "comfortable" with most of its provisions. Federal Energy Regulatory Commission Chairman Patrick Wood III upped the ante in his investigation into the possible manipulation of Western energy markets. In an unexpectedly aggressive move, FERC issued an order threatening to take away the right to charge market-based rates from four energy traders unless they provide the agency with details of their trading activity in 2000 and 2001. The companies cited by FERC--El Paso Electric (EE), Portland General Electric (PGB), Avista (AVA), and Williams Energy Marketing & Trading (WMB)--are expected to comply with the agency's request within the required 10-day period. FERC's move was perceived as a response to pressure from California Democrats and others who fault Enron and fellow energy traders for their state's rolling power shortages two years ago. The west coast sun rarely shines for tobacco companies--and on June 5, the industry's biggest player, Philip Morris (MO), was dealt another setback there. The Oregon Court of Appeals rejected the company's appeal of a 1999 verdict in the death of lifelong Marlboro smoker Jesse Williams, reinstating a $79.5 million punitive jury verdict. Philip Morris immediately said it would appeal. Supporters noted that despite setbacks in Oregon and California, tobacco companies have won the majority of similar cases in other regions. "There's a pocket of a problem you can't ignore," says Salomon Smith Barney analyst Bonnie Herzog, who's maintaining her "buy" rating on the stock. -- General Motors Chairman Jack Smith plans to retire next year at age 65.
-- Coca-Cola is paying $100 million to rename Enron Field for Minute Maid orange juice.
-- Dell Computer's board authorized the buyback of 250 million more shares. Shares of Perot Systems (PER) fell 19.1%, to $14.55, on June 5 after California State Senator Joseph Dunn (D) alleged the Plano (Tex.)-based technology services company aided power companies in manipulating energy prices in the state. Perot Systems, whose founder and chairman is H. Ross Perot, denies the allegations.