Priceline.com Teams Up With Hutchison Whampoa To Bring Buyer-Driven E-Commerce To Asia
NORWALK, Conn. and HONG KONG--(BUSINESS WIRE)--Jan. 26, 2000--Priceline.com (Nasdaq: PCLN) and Hutchison Whampoa Limited ("Hutchison") today announced an alliance to introduce priceline.com's unique buyer-driven e-commerce platform to 2.6 billion consumers in Asia's most populous countries, including China (and Hong Kong), India, Taiwan, Indonesia, Singapore, Thailand, Korea, Malaysia, the Philippines and Vietnam. The alliance does not apply to Japan.
Priceline.com is the patented Name-Your-Own-Price Internet pricing system that currently offers services in the U.S. for leisure airline tickets, hotel rooms, new cars, rental cars, home refinancing and home equity loans. The Company also has announced that it will offer additional services this year for credit cards and long-distance calling.
In less than two years, priceline.com has added four million customers and grown its business rapidly. It is expected to report 1999 revenues of almost half a billion dollars. Priceline.com also said that it expected a strong first quarter and had already set weekly sales records of 80,000 airline tickets and 20,000 hotel rooms respectively.
Hutchison Whampoa is a conglomerate with a market capitalization of over $53 billion. Among its many businesses, it is one of Asia's largest owners and operators of Internet and telecommunications infrastructure offering a wide range of related services. These include fixed-line services, ISP (Hutchcity) and ICP (tom.com) services, Web hosting services, fiber optics broadband networks, mobile telephone data and internet services, paging, trunked mobile radio, VSAT and radio broadcasting services.
Hutchison's Internet related operations have been growing rapidly. The Company recently teamed up with Global Crossing to further expand its global connectivity and to pursue fibre optic broadband network opportunities in the Greater China Region. Cooperation with NTT DoCoMo which owns 19% of Hutchison's mobile communications businesses in Hong Kong offers its customers advanced mobile Internet opportunities.
Hutchison is also a part of iBusiness Corporation.com, a joint venture with its parent company Cheung Kong (Holdings) Limited, the Hongkong and Shanghai Banking Corporation Limited, and Hang Seng Bank to facilitate e-commerce on the Internet.
Under the terms of the agreement in principle between priceline.com and a subsidiary of Hutchison, a new company will be created and funded by both parties to launch and manage the Asian Name-Your-Own-Price service. Priceline.com will license its business model to the new company as well as contribute its expertise in technology, marketing and operations. Hutchison will contribute its strong brand and leverage its extensive customer base and retail network in Asia, global data center capabilities, local supplier contacts, vast management expertise and a rapidly developing Internet platform to benefit the new company.
The new company will pay priceline.com an annual licensing fee in respect of priceline.com's intellectual property. In addition, priceline.com will purchase a convertible note allowing priceline.com to take up to a 50% equity stake in the company under certain conditions. Until that note is converted, priceline.com will not hold an equity stake and financial results from the new company will not be included in priceline.com's financial statements. Hutchison is purchasing equity securities in the new company and is providing management services.
The transaction is subject to the approval of the Boards of Directors of both companies' negotiation and execution of definitive agreements and to certain other conditions. The new company is expected to launch its first service for leisure airline tickets later this year.
Priceline.com Chairman and CEO Richard S. Braddock commented, "The Pacific Rim is projected to be one of the most dynamic economic regions of the new millennium, with the Internet being one of the region's fastest growing industries. Any Internet company expecting to be a major world player needs to establish a significant, meaningful and long-term presence in Asian countries. We could not have asked for a better partner than Hutchison Whampoa with which to launch and grow our Asian presence. Hutchison's experience, size, influence and, most importantly, knowledge of the region will allow priceline.com to quickly establish operations throughout Asia on which we can build a lucrative business in the coming years."
Hutchison Whampoa Group Managing Director Canning Fok remarked, "I am very pleased that Hutchison will work with priceline.com to introduce the powerful Name Your Own Price buying concept to these countries. With our extensive telecommunications and Internet infrastructure, Hutchison is uniquely positioned to deploy this buyer-driven e-commerce business. I am impressed with priceline.com's remarkable achievements and customer satisfaction in the U.S. and look forward to repeating this success here in Asia."
About Hutchison Whampoa Ltd.
Hutchison Whampoa is a Hong Kong-based conglomerate with origins dating back to the 1800s. Hutchison is part of the Li Ka-shing group of companies, which together represent 16% of the total market capitalization of the Hong Kong stock market. In 1998, consolidated turnover was over $6.6 billion, and after-tax earnings were approximately $1.1 billion.
With over 80,000 employees worldwide, Hutchison operates five core businesses in 26 countries: ports and related services; telecommunications and Internet; property development and holdings; retail, manufacturing and other services; and energy and infrastructure.
The Group's telecommunications business and holdings span several continents, and include such diverse products as cellular telephone network services, fixed-line services, fiber optics services, paging, trunked mobile radio services, VSAT and radio broadcasting. Hutchison recently sold its UK mobile communications operations to Mannesmann for US$14.6 billion and is currently the largest shareholder in Mannesmann AG.
As part of its retail services, the Group recently constructed the largest shopping center in Beijing and operates about 800 retail outlets in Asia. Under its property division, Hutchison also owns and manages hotels in China, Hong Kong and the Bahamas.
For more information, please visit www.hutchison-whampoa.com.
Priceline.com is the patented Internet pricing system that
enables consumers to achieve significant savings by naming their own price for goods and services. Priceline.com takes consumer offers and then presents them to sellers who can fill as much of that guaranteed demand as they wish at price points determined by buyers. Priceline.com's "virtual" business model allows for rapid scaling using the Internet. Because the Company electronically collects consumer demand, it can fill this demand directly with sellers or by using proprietary databases. Priceline.com does not maintain or warehouse inventories in any of its product lines. Priceline.com is currently selling multiple services to its sellers across three distinct product categories: a travel service that offers leisure airline tickets, hotel rooms and rental cars, a personal finance service that offers home refinancing and home equity loans, and an automotive service that offers new cars. Recently, priceline.com announced that it would also offer new services for long-distance telephone calling and credit cards.
This press release may contain forward-looking statements which are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Expressions of future goals and similar expressions including, without limitation, "may," "will," "believes," "should," "could," "hope," "expects," "expected," "does not currently expect," "anticipates," "predicts," "potential," and "forecast," reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements involve a number of risks and uncertainties, including the timely development and market acceptance of products and technologies and other factors described in the Company's filing with the Securities and Exchange Commission. The actual results may differ materially from any forward-looking statements due to such risks and uncertainties. The Company undertakes no obligations to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
Brian Ek, 203/299-8167
Mike Darcy, 203/299-8168
Hutchison Whampoa Ltd. (Hong Kong)
Laura Cheung, 852-2128-1289