A Los Angeles law firm has filed a class-action lawsuit to block News Corp.’s acquisition of Intermix Media, claiming that the $580 million deal was structured mainly to benefit executives, directors and controlling shareholders of the Internet company.
News Corp. announced the Intermix deal in July, the fulfillment of chairman Rupert Murdoch’s earlier promise to move aggressively in the Internet space. Intermix has more than 30 Web properties, the most valuable its popular “social networking” site MySpace.com. The deal is expected to close in the fourth quarter.
According to a press release, Los Angeles law firm Kreindler & Kreindler LLP filed a class action suit Wednesday in California State Superior Court, alleging that Intermix’s board and officers failed to provide a bidding mechanism for a fair auction of the company; failed to solicit alternative transactions or other potential buyers; failed to take steps to maximize Intermix’s value to shareholders; undervalued Intermix’s prime asset, MySpace.com; failed to structure the deal to allow Intermix’s shareholders a change of control premium, which the law firm said is customary in such deals; tailored the News Corp. deal to advance their own financial, legal and other personal interests at the expense of Intermix's public shareholders.
The lawsuit seeks permanent and injunctive relief and to recover damages.