July 23 (Bloomberg) -- Expedia Inc., the Internet travel agency run by Barry Diller, slashed the number of shares it plans to buy back by 79 percent because it can't get enough financing with acceptable terms.

The stock dropped as much as 9.5 percent.

Expedia will repurchase 25 million shares, or 8 percent of common stock, for $27.50 to $30 each. Its original plan called for buying back as many as 116.7 million shares. The tender offer expires on Aug. 8, Expedia said today in a statement.

Shares of Expedia, the world's largest Internet travel agency, rallied the most since the company went public on June 19 after it announced the original plan. The company said later that month that its debt may increase eightfold from financing the transaction.

``The terms available to us in the current debt market environment were simply unacceptable,'' Chairman Diller said in today's statement.

Expedia shares fell $2.39, or 8.1 percent, to $27 at 9:34 a.m. in Nasdaq Stock Market composite trading. Before today, they had climbed 15 percent since June 18, the day before the buyback was announced.

The company's debt would have climbed to $4.07 billion from $500 million if it repurchased all 116.7 million shares, or 42 percent of common stock, at the maximum proposed price of $30 each, according to a regulatory filing June 29.

Expedia spent $660 million buying back 30 million shares in January.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net

Last Updated: July 23, 2007 09:37 EDT