IAC/InterActiveCorp, the media company run by Barry Diller, has filed a complaint against Douglas County-based Liberty Media Corp. over IAC’s plan to divide into five companies.
Liberty, which holds a 30 percent stake in IAC, threatened to block the spinoff unless the deal was structured to give it control of the new companies, IAC said in a complaint filed Wednesday in Chancery Court in Wil mington, Del. IAC asked a judge to declare the proposed spinoff proper.
IAC, based in New York, said in November it would be divided into five publicly traded companies, including the HSN home-shopping network and Ticketmaster. The spinoff requires approval from stockholders, including Liberty.
Liberty officials declined to comment Wednesday but have applauded Diller’s move.
“I think it’s terrific for us. Each one of these businesses will now have clear independent management,” Liberty chairman John Malone said in a conference call with analysts in November. “I think it represents a great opportunity for Liberty and IAC shareholders to focus their investment and their interests in the areas that they (align with) the most.”
The companies are in talks to swap HSN for Liberty’s IAC stake, said Chris Marangi, analyst with Gabelli & Co. in Rye, N.Y.
“This is about negotiation,” Marangi said. “They are laying the bargaining chips out on the table. The crux of the matter here is Liberty’s ability to block the spinoff.”
After the spinoff, the five companies would each have a single-tier voting structure. Liberty’s new shares would have the same voting rights as all other shares, for about 30 percent voting power, the complaint states.
Liberty argued that the spinoff should replicate IAC’s current structure, giving Liberty about 50.4 percent of the voting power in each of the new companies, IAC said. While Liberty’s IAC stake gives it about 62 percent of the existing company’s voting power, Diller controls those voting rights.
Malone said at a Jan. 16 board meeting that Liberty “will aggressively pursue each and every remedy available to it against all appropriate persons and entities,” IAC said in its complaint.
IAC spokeswoman Stacy Simpson declined to comment further on the suit.
