LodgeNet Enters into Definitive Agreement to Acquire On Command

  • LodgeNet Interactive Corporation
  • 12.14.06
LodgeNet Entertainment Corporation announced it has entered into a definitive agreement with Liberty Media Corporation and its Liberty Satellite & Technology, Inc. subsidiary (together “Liberty”) to purchase all of the capital stock of Ascent Entertainment Group, Inc., the owner of 100 percent of the capital stock of On Command Corporation, for $380 million.

The purchase price will be paid at closing by the issuance of 2.05 million shares of LodgeNet common stock and $332 million in cash. Financing for the acquisition is being provided by Bear Stearns & Co. and Credit Suisse. At closing, Liberty will own approximately 9.9 percent of LodgeNet’s common stock. The transaction, which is expected to close in mid-2007, is subject to customary closing conditions.

On Command Corporation, based in Denver, Colorado, provides interactive media services to approximately 830,000 hotel rooms throughout the United States, Canada and Mexico. It also owns 80 percent of the capital stock of The Hotel Networks, Inc., the distributor of advertising-supported, satellite-delivered television programming to approximately 300,000 rooms throughout the United States. During 2006, On Command is expected to generate revenue of more than $225 million and adjusted operating cash flow of approximately $58 million.
“This is a compelling transaction across all strategic, operating and financial aspects,” said Scott C. Petersen, LodgeNet president and CEO. “This is another significant step forward in the execution of our strategy to expand our networks and integrate a broader range of solutions for our customers. On Command is an outstanding organization with an impressive array of hotel customers, products and services. They offer an ideal fit with our organization and should provide numerous synergies while improving our ability to generate greater value for our hotel customers and their guests.
“We operate in a rapidly changing environment, and by combining our room bases, service organizations,
programming teams and engineering expertise, we can better serve our lodging customers and their guests by giving them not only the most services, but also the best services,” said Petersen. “We believe that by combining talents of our two organizations, we can deliver on the evolving needs of our customers not only faster, but with better and more cost-effective technologies and solutions. We are dedicated to bringing value to the hotel industry through new content options and connectivity solutions for the guest and new revenue and brand marketing opportunities for hotels, brands and their owners, managers and franchisees. We remain committed to our disciplined financial approach to the business and believe that uniting these two companies will generate long-term value for our shareholders.”
“We believe this transaction will better enable the delivery of a world-class, unified suite of technologies,
solutions, and content for hotels and their guests,” said William Fitzgerald, senior vice president of Liberty Media Corporation. “Additionally, the sale of On Command shows continued progress toward our stated goal of
converting non-core assets attributed to the Liberty Capital Group into cash and strategic operating businesses.
“As we announced today in a separate press release, Par Capital Management, Inc., one of our longest and
largest shareholders, has agreed to make an additional strategic investment in our company to support the On Command acquisition,” said Petersen. “Par will purchase 1,000,000 shares of common stock from LodgeNet in a private transaction for approximately $23 million.” The Par transaction will be completed in conjunction with the closing of LodgeNet’s acquisition of On Command, and is subject to certain closing conditions.
Bear Stearns & Co., Inc. represented LodgeNet in the transaction. Lehman Brothers, Inc. and Daniels &
Associates represented Liberty Media Corporation in the transaction. Leonard Street and Deinard, P.A. acted as
legal counsel for LodgeNet.

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