Judge Allows IAC Split
by Mike Farrell -- Multichannel News, 3/31/2008
A Delaware Chancery Court judge ruled in favor of IAC/InterActiveCorp late Friday, dismissing Liberty Media’s intention to block the Internet giant’s attempt to split into five separate companies.
The ruling came two weeks after a five-day trial in Wilmington, Del., and would seem to be a major blow to Liberty, which had hoped that the trial would allow it to sever its relationship with IAC chairman Barry Diller once and for all and gain control of IAC.
The dispute stemmed from IAC’s Nov. 5 plan to split into five separate entities: Liberty, which initially was in favor of the split, changed its mind when it learned Diller had planned a single-tier structure. Liberty, which owns a 29% economic interest but 62% voting control of IAC, claimed the single-tier structure would halve its control of the entities. Diller has an irrevocable proxy to vote their shares and claimed that because of that proxy, he was allowed to change the structure as he pleased.
In his 78-page decision issued late on March 28, Delaware Chancery Court Judge Stephen Lamb wrote that the single-tier spin will not violate the agreement. “For all the foregoing reasons, judgment will be entered … in favor of the defendants [IAC] and against the plaintiffs [Liberty] and that action is dismissed with prejudice,” Lamb wrote. He added that IAC does not need Liberty’s consent to complete the spinoff.
