SC TO-I/A

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

Amendment No. 2 to

Schedule TO

Tender Offer Statement under Section

14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934 

Expedia, Inc. 

(Name of Subject Company (Issuer)) 

Expedia, Inc.

(Name of Filing Person (Offeror/Issuer)) 

Common Stock, Par Value $.001 Per Share 

(Title of Class of Securities)

30212P105

(CUSIP Number of Class of Securities) 

Burke F. Norton, Esq.

Executive Vice President, General Counsel and Secretary 

Expedia, Inc.

3150 139th Avenue S.E.

Bellevue, WA 98005

Telephone: (425) 679-7200

(Name, Address and Telephone Number of Person Authorized 

to Receive Notices and Communications on Behalf of Filing Persons) 

Copy to:

Pamela S. Seymon, Esq.

Wachtell, Lipton, Rosen & Katz 

51 West 52nd Street

New York, New York 10019 

Telephone: (212) 403-1000 

CALCULATION OF FILING FEE

Transaction Valuation*	Amount of Filing Fee**
$3,499,999,950	$107,450

*	Calculated solely for purposes of determining the amount of the filing fee. Pursuant to Rule 0-11(b)(1) of the Securities Exchange Act of
	1934, as amended, the Transaction Valuation was calculated by multiplying 116,666,665 (the maximum number of shares originally sought
	to be repurchased) by the maximum possible tender offer price of $30.00 per share.
**	The amount of the filing fee, calculated in accordance with Rule 0-11(b)(1) of the Securities Exchange Act of 1934, as amended, equals
	$30.70 per million of the value of the transaction.
þ	Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
	previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid: $107,450	Filing Party: Expedia, Inc.
Form or Registration No.: Schedule TO	Date Filed: June 29, 2007

¨           Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. 

  Check the appropriate boxes below to designate any transactions to which the statement relates: 

     ¨ third-party tender offer subject to Rule 14d-1. 

     þ issuer tender offer subject to Rule 13e-4. 

     ¨ going-private transaction subject to Rule 13e-3. 

     ¨ amendment to Schedule 13D under Rule 13d-2. 

Check  the following box if the filing is a final amendment reporting the results of the tender offer:  ¨

Amendment No. 2 to Schedule TO

     This Amendment No. 2 amends and supplements the Tender Offer Statement on Schedule TO originally filed with the Securities and Exchange Commission (the “Commission”) on June 29, 2007 (the “Schedule TO”) by Expedia, Inc., a Delaware corporation (“Expedia”), as amended by Amendment No. 1 to Schedule TO filed with the Commission on June 29, 2007, relating to the offer to purchase for cash shares of Expedia’s common stock, par value $.001 per share (“Shares”), at a price determined by Expedia of not more than $30.00 nor less than $27.50 per Share, net to the seller in cash, without interest. The offer to purchase was made upon the terms and subject to the conditions set forth in the offer to purchase, dated June 29, 2007 (the “Offer to Purchase”) and the related letter of transmittal (the “Letter of Transmittal”), which together, as each ma y be amended or supplemented from time to time, constitute the “Offer.”

     On July 23, 2007, Expedia issued a press release amending the Offer to reduce the maximum number of Shares that Expedia is offering to purchase to 25,000,000 Shares and to remove the "financing condition" (as defined in the Offer to Purchase). The press release is attached hereto as Exhibit (a)(5)(F). A supplement describing the amended Offer will be mailed to stockholders and filed as an exhibit to an amendment to the Schedule TO.

     The information in the Offer is incorporated into this Amendment No. 2 to the Schedule TO by reference in response to all of the applicable items in the Schedule TO, except that such information and each applicable item of the Schedule TO is hereby amended and supplemented by the information provided herein. This Amendment No. 2 is intended to satisfy the reporting requirements of Rule 13e-4(c)(3) of the Securities Exchange Act of 1934, as amended. Copies of the Offer to Purchase and the related Letter of Transmittal were previously filed with the Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively.

ITEM 12. EXHIBITS

Item 12 of the Schedule TO is hereby amended by adding the following exhibits:

(a)(5)(F)	Press release, dated July 23, 2007
(a)(5)(G)	Email Message from Dara Khosrowshahi, Chief Executive Officer of Expedia,
	Inc., to employees of Expedia, Inc., dated July 23, 2007

SIGNATURE

       After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

EXPEDIA, INC. 

By: /s/ Burke F. Norton 

     Name:  Burke F. Norton 

     Title:    Executive Vice President, General 

                    Counsel & Secretary 

Dated: July 23, 2007

EXHIBIT INDEX
(a)(1)(A)	Offer to Purchase, dated June 29, 2007(14)
(a)(1)(B)	Letter of Transmittal(14)
(a)(1)(C)	Notice of Guaranteed Delivery(14)
(a)(1)(D)	Letter to brokers, dealers, commercial banks, trust companies and other nominees, dated June 29,
	2007(14)
(a)(1)(E)	Letter to clients for use by brokers, dealers, commercial banks, trust companies and other
	nominees, dated June 29, 2007(14)
(a)(1)(F)	Letter from the Trustee of the Expedia Retirement Savings Plan to plan participants, dated June
	29, 2007(14)
(a)(1)(G)	Direction Form for participants in the Expedia Retirement Savings Plan(14)
(a)(2)	Not applicable
(a)(3)	Not applicable
(a)(4)	Not applicable
(a)(5)(A)	Summary Advertisement, dated June 29, 2007(14)
(a)(5)(B)	Letter from Dara Khosrowshahi, Chief Executive Officer of Expedia, Inc., to stockholders of
	Expedia, Inc., dated June 29, 2007(14)
(a)(5)(C)	Press release, dated June 19, 2007(1)
(a)(5)(D)	Letter to Warrant and Series A Cumulative Convertible Preferred Stock Holders, dated June 29,
	2007(14)
(a)(5)(E)	Email Message from Dara Khosrowshahi, Chief Executive Officer of Expedia, Inc., to employees
	of Expedia, Inc., dated June 29, 2007, and Employee Frequently Asked Questions Regarding the
	Tender Offer(15)
(a)(5)(F)	Press Release, dated July 23, 2007
(a)(5)(G)	Email message from Dara Khosrowshahi, Chief Executive Officer of Expedia, Inc., to employees of
	Expedia, Inc., dated July 23, 2007
(b)(1)	Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation,
	Expedia, Inc., a Washington corporation, Travelscape, Inc., a Nevada corporation, Hotels.com, a
	Delaware corporation, and Hotwire, Inc., a Delaware corporation, as Borrowers; the Lenders party
	thereto; Bank of America, N.A., as Syndication Agent; Wachovia Bank, N.A. and The Royal Bank
	of Scotland PLC, as Co-Documentation Agents; JPMorgan Chase Bank, N.A., as Administrative
	Agent; and J.P. Morgan Europe Limited, as London Agent(2)
(b)(2)	First Amendment, dated as of December 7, 2006, to the Credit Agreement dated as of July 8,
	2005, among Expedia, Inc., a Delaware corporation; Expedia, Inc., a Washington corporation;
	Travelscape LLC, a Nevada limited liability company; Hotels.com, a Delaware corporation;
	Hotwire, Inc., a Delaware corporation; the other Borrowing Subsidiaries from time to time party
	thereto; the Lenders from time to time party thereto; JPMorgan Chase Bank, N.A., as
	Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(3)
(b)(3)	Second Amendment, dated as of December 18, 2006, to the Credit Agreement dated as of July 8,
	2005, among Expedia, Inc., a Delaware corporation; Expedia, Inc., a Washington corporation;
	Travelscape LLC, a Nevada limited liability company; Hotels.com, a Delaware corporation;
	Hotwire, Inc., a Delaware corporation; the other Borrowing Subsidiaries from time to time party
	thereto; the Lenders from time to time party thereto; JPMorgan Chase Bank, N.A., as
	Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(4)
(d)(1)	Expedia, Inc. Non-Employee Director Deferred Compensation Plan(5)
(d)(2)	Expedia, Inc. 2005 Stock and Annual Incentive Plan(6)
(d)(3)	Summary of Expedia, Inc. Non-Employee Director Compensation Arrangements(7)
(d)(4)	Stockholders Agreement between Liberty Media Corporation and Barry Diller, dated as of August
	9, 2005(8)
(d)(5)	Governance Agreement, by and among Expedia, Inc., Liberty Media Corporation and Barry
	Diller, dated as of August 9, 2005(8)
(d)(6)	First Amendment to Governance Agreement, by and among Expedia, Inc., Liberty Media
	Corporation and Barry Diller, dated as of June 19, 2007(1)
(d)(7)	Separation Agreement, dated as of August 9, 2005, by and between IAC/InterActiveCorp and
	Expedia, Inc.(8)
(d)(8)	Tax Sharing Agreement dated as of August 9, 2005, by and between IAC/InterActiveCorp and
	Expedia, Inc.(8)
(d)(9)	Form of Expedia, Inc. Restricted Stock Unit Agreement (directors)(8)

(d)(10)	Expedia, Inc. Executive Deferred Compensation Plan, effective as of August 9, 2005(9)
(d)(11)	Expedia, Inc. Restricted Stock Unit Agreement between Expedia, Inc. and Dara Khosrowshahi,
	dated as of March 7, 2006(10)
(d)(12)	Employment Agreement by and between Michael B. Adler and Expedia, Inc., effective as of May
	16, 2006(11)
(d)(13)	Expedia, Inc. Restricted Stock Unit Agreement between Expedia, Inc. and Michael B. Adler,
	effective as of May 16, 2006(11)
(d)(14)	Employment Agreement by and between Burke F. Norton and Expedia, Inc., effective as of
	October 25, 2006(11)
(d)(15)	Expedia, Inc., Restricted Stock Unit Agreement (First Agreement) between Expedia, Inc. and
	Burke F. Norton, dated as of October 25, 2006(11)
(d)(16)	Expedia, Inc. Restricted Stock Unit Agreement (Second Agreement) between Expedia, Inc. and
	Burke F. Norton, dated as of October 25, 2006(11)
(d)(17)	Form of Expedia, Inc. Restricted Stock Unit Agreement (domestic employees)(11)
(d)(18)	Equity Warrant Agreement for Warrants to Purchase up to 14,590,514 Shares of Common Stock
	expiring February 4, 2009, between Expedia, Inc. and The Bank of New York, as Equity Warrant
	Agent, dated as of August 9, 2005(12)
(d)(19)	Stockholder Equity Warrant Agreement for Warrants to Purchase up to 11,450,182 Shares of
	Common Stock, between Expedia, Inc. and Mellon Investor Services LLC, as Equity Warrant
	Agent, dated as of August 9, 2005(12)
(d)(20)	Optionholder Equity Warrant Agreement for Warrants to Purchase up to 1,558,651 Shares of
	Common Stock, between Expedia, Inc. and Mellon Investor Services LLC, as Equity Warrant
	Agent, dated as of August 9, 2005(12)
(d)(21)	Indenture, dated as of August 21, 2006, among Expedia, Inc., as Issuer, the Subsidiary Guarantors
	from time to time parties thereto, and The Bank of New York Trust Company, N.A., as Trustee,
	relating to Expedia, Inc.’s 7.456% Senior Notes due 2018(11)
(d)(22)	First Supplemental Indenture, dated as of January 19, 2007, to Indenture, dated as of August 21,
	2006, by and among Expedia, Inc., certain Subsidiary Guarantors (as defined therein) and The
	Bank of New York Trust Company, N.A., as Trustee(13)
(d)(23)	Amended and Restated Expedia, Inc. Retirement Savings Plan(14)
(d)(24)	First Amendment to Expedia, Inc. Retirement Savings Plan(14)
(d)(25)	Trust Agreement between Expedia, Inc. and Fidelity Management Trust Company, dated as of
	August 15, 2005, relating to the Expedia Retirement Savings Plan(3)
(g)	Not applicable
(h)	Not applicable

(1)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on June 19, 2007
(2)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on July 14, 2005
(3)	Incorporated by reference to Expedia, Inc.’s Tender Offer Statement on Schedule TO (File No. 005-80395)
	filed on December 11, 2006
(4)	Incorporated by reference to Expedia, Inc.’s Amendment No. 3 to Tender Offer Statement on Schedule TO
	(File No. 005-80395) filed on December 22, 2006
(5)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-4/A (File No. 333-124303-
	01) filed on June 13, 2005
(6)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-8 (File No. 333-127324)
	filed on August 9, 2005
(7)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March
	31, 2007
(8)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
	September 30, 2005
(9)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on December 20, 2005
(10)	Incorporated by reference to Expedia, Inc.’s Annual Report on Form 10-K for the fiscal year ended
	December 31, 2005
(11)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended
	September 30, 2006

(12)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form 8-A/A filed on August 22,
	2005
(13)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-4 (File No. 333-140195)
	filed on January 25, 2007
(14)	Previously filed with Expedia, Inc.’s Tender Offer Statement on Schedule TO filed on June 29, 2007
(15)	Previously filed with Amendment No. 1 to Expedia, Inc.’s Tender Offer Statement on Schedule TO on June
	29, 2007

EX-99.(A)(5)(F)

Exhibit (a)(5)(F)

Team Expedia:

Today we announced that we are amending the tender offer for our shares to reduce the maximum number of shares we would purchase from 116.7 million shares to 25 million shares, which represents approximately 8% of our outstanding equity. The announcement is attached for your reference.

We pursued the Dutch auction tender offer for two reasons: (1) we believed (and still believe) that buying our stock is a great long term investment and use of capital, and (2) the cost and terms of financing necessary to secure our stock were attractive, especially on a historical basis. Unfortunately, the latter of those factors has changed drastically in the past few weeks: the much publicized subprime mortgage meltdown and huge supply of corporate LBO financing demand have caused the debt capital markets to tighten up dramatically. This has resulted in potential financing terms in relation to a tender offer for up to $3.5B of our stock to be simply unacceptable.

The good news is that the fundamentals of our business are very strong, with accelerating transaction growth (we expect 14% in Q2) and healthy second quarter results for revenue and OIBA that will exceed street analyst consensus estimates. Our belief in our company remains rock solid, and, as a result, we have decided to finance the offer with our existing bank revolver, continuing to offer to purchase shares at the same prices that we had initially offered, at a reduced amount that we believe is sensible and provides us with appropriate financial flexibility going forward.

I do wish that I was writing this email to you with the news that we had bought in a ton of stock in our tender offer – know, however that the most important element in regards to the future value of our stock and success of our company is our ability to execute on our business across our brands and on a global basis. No amount of financial structuring and engineering can replace great execution. We have made incredible strides as a company in the last year - let's keep it up, and keep pushing!

Thanks again for all the effort and your passion.

Dara.

EX-99.(A)(5)(G)

Exhibit (a)(5)(G)

Expedia Decreases Number of Shares Sought in Tender Offer

BELLEVUE, Wash., July 23 /PRNewswire-FirstCall/ -- Expedia, Inc. (Nasdaq: EXPE) announced today that it is amending its tender offer to purchase shares of the Company's common stock to reduce the maximum number of shares that the Company is offering to purchase to 25,000,000 shares, due to the lack of available financing, on terms satisfactory to the Company, as a result of current conditions in the credit markets. The terms and conditions of the original tender offer are set forth in the Offer to Purchase, dated June 29, 2007, and related letter of transmittal.

Expedia currently expects to fund the purchase of shares under the amended tender offer through available borrowing capacity under the Company's existing bank credit facility. As a result, Expedia is further amending the tender offer to remove the financing condition on which the original tender offer was conditioned.

"While we remain confident in Expedia's long-term prospects and will continue to be net buyers of our shares, the terms available to us in the current debt market environment were simply unacceptable," said Barry Diller, Expedia Inc.'s Chairman and Senior Executive. "Our confidence in Expedia's future is well held, with second quarter transaction growth of 14% -- our highest in six quarters -- and our expectation of exceeding consensus estimates for revenue and OIBA."

Under the terms and conditions of the amended tender offer, Expedia is offering to purchase up to 25,000,000 shares of its common stock at a price per share not less than $27.50 and not greater than $30.00. The 25,000,000 shares subject to the amended tender offer represent approximately 9% of the number of shares of common stock currently outstanding and approximately 8% of the total number of shares of common stock and Class B common stock currently outstanding. The tender offer will expire, unless extended, at 5:00 p.m., New York City time, on August 8, 2007. Under the modified "Dutch auction" tender offer, stockholders may indicate how many shares and at what price within the Company's specified range they wish to tender. Based on the number of shares tendered and the prices specified by the tendering stockholders, the Company will determine the lowest price per share within the range at which the Company can purchase 25,000,000 shares of its common stock or such lesser number of shares as are properly tendered. The Company will not purchase shares below a price stipulated by a stockholder, and in some cases, may purchase shares at prices above a stockholder's indication under the terms of the modified "Dutch auction."

Further information regarding the amended tender offer will be contained in a supplement to Expedia's Offer to Purchase that will be sent to stockholders and will be filed with the Securities and Exchange Commission ("SEC") under an amendment to the Company's Tender Offer Statement on Schedule TO relating to the tender offer.

This press release is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any shares of the Company's common stock. The solicitation and offer to buy the Company's common stock are being made only pursuant to the Offer to Purchase and related materials, as amended by the supplement referred to above. Stockholders should read those materials carefully because they will contain important information, including the various terms

and conditions of the amended tender offer. Stockholders may obtain copies of the original Offer to Purchase, related materials filed by the Company as part of the Tender Offer Statement on Schedule TO and other documents filed with the Securities and Exchange Commission, and, when available, the supplement to the Offer to Purchase, through the SEC's internet address at http://www.sec.gov without charge. Stockholders and investors may also obtain a copy of these documents, as well as any other documents the Company has filed with the SEC, without charge, from the Company or at the Investor Relations section of the Company's website: http://www.expediainc.com. Stockholders and investors who have questions or need assistance may call MacKenzie Partners, Inc. (the information agent for the tender offer) at 1-800-322-2885 in the United States and Canada, and +1-212-929-5500 for all other countries.

About Expedia, Inc.

Expedia, Inc. is the world's leading online travel company, empowering business and leisure travelers with the tools and information they need to easily research, plan, book, and experience travel. Expedia, Inc. also provides wholesale travel to offline retail travel agents. Expedia, Inc.'s portfolio of brands includes: Expedia.com(R), hotels.com(R), Hotwire(R), Expedia(R) Corporate Travel, TripAdvisor(TM) and Classic Vacations(R). Expedia, Inc.'s companies also operate internationally with sites in Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, the United Kingdom and China, through its investment in eLong(TM). For more information, visit http://www.expediainc.com (Nasdaq: EXPE).

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, regarding Expedia, Inc.'s intention to repurchase up to 25,000,000 shares of its common stock and the financial information provided above. These statements are subject to a variety of risks and uncertainties including our ability to consummate the repurchase. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of Expedia, Inc. are contained in our filings with the SEC, including our reports on Forms 10-K. Expedia, Inc. undertakes no obligation to release publicly the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.