The New York Times-20080126-Stakeholder Sues IAC Over Breakup Plan
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Stakeholder Sues IAC Over Breakup Plan
Full Text (293 words)The Liberty Media Corporation, the entertainment and Internet retailing company controlled by the billionaire John C. Malone, has sued IAC/InterActiveCorp in a dispute over IAC's plans to split into five companies.
Liberty Media accused IAC's chief executive, Barry Diller, of trying to wrest away control of the new companies and dilute Liberty's voting power, according to a complaint filed in Delaware Chancery Court on Thursday.
Liberty, which holds a 30 percent stake in IAC, is seeking unspecified damages and a court order blocking the spinoff. IAC filed a lawsuit earlier this week asking a judge to declare the proposed spinoff proper.
An IAC spokeswoman, Stacy Simpson, did not immediately return a phone call seeking comment.
IAC announced in November that it would split into five publicly traded companies, including Ticketmaster and the HSN home-shopping network. The current proposal calls for the new companies to have a single-tier voting structure, which would dilute Liberty's voting interest to 30 percent. Liberty argues that the spinoff should mirror IAC's dual-class voting structure, thus giving the company about 62 percent of the voting power.
Mr. Diller, the former head of Paramount Pictures, controls the voting rights of all IAC shares that Liberty owns and has said he will exercise those rights in favor of the spinoff. Liberty argues that that action would violate a stockholders' agreement and terminate Mr. Diller's proxy powers. The suit claims that the agreement requires Mr. Diller to vote all IAC shares subject to his control by proxy against any contingent matter that Liberty opposes.
Liberty Interactive, the tracking stock for QVC and other Liberty shopping units, fell 50 cents, to $14.76. IAC shares fell 33 cents, to $24.40.
[Illustration]PHOTO: Liberty Media is controlled by John C. Malone. (PHOTOGRAPH BY MATTHEW STAVER/BLOOMBERG NEWS)