USA Interactive to acquire LendingTree Inc. for 4.4 times revenue

Weekly Corporate Growth Report, May 12, 2003

The Deal: USA Interactive has agreed to acquire LendingTree Inc. in a stock-for-stock transaction. Under the terms of the deal, LendingTree shareholders will receive 0.6199 per share of USA Interactive common stock for each common share of LendingTree. Based on recent stock prices, the deal values LendingTree at approximately $21.67 per share. LendingTree preferred stock holders will receive the same merger consideration on an as-converted basis, bring the total deal value to about $626 million to $734 million. The transaction has been approved by the boards of both companies, but still requires approval from LendingTree shareholders. The deal is expected to close in late summer.

Discussion: LendingTree, Inc. describes itself as a loan exchange. Clients complete a single loan application that LendingTree then shops around to many potential lenders. LendingTree charges lenders transaction fees upon submitting the loan application and again when the loan is closed. The company also provides access to some 650 real estate brokerages.

USA Interactive, formerly known as USA Networks Inc., operates through its subsidiaries as a diversified media and electronic commerce business. Company subsidiaries include Home Shopping Network, Ticketmaster, Expedia, Inc., and Hotel Reservations Network, Inc., among others.

The acquisition will allow USA Interactive to add loan services to its e-commerce offerings.