Diller Allowed To Proceed With IAC Breakup

New York Times:

In the battle of the billionaire media moguls, the protégé won.

A Delaware Chancery Court judge ruled Friday that Barry Diller could go forward with a plan to split his e-commerce conglomerate IAC/InterActiveCorp into five companies, thwarting an attempt by John C. Malone to block the deal and oust Mr. Diller.

The decision came two weeks after a five-day trial in which Mr. Malone, the billionaire chairman of Liberty Media, which is the majority voting stockholder in IAC, had sought to gain control of IAC. With the court decision, Mr. Diller can now go ahead with his plan to break IAC into five companies: the HSN home shopping network; Ticketmaster; Interval, a vacation time-share company; and LendingTree, a mortgage broker, as well as IAC, which would include Match.com and Ask.com.

The ruling, however, left the door open for Mr. Malone to challenge the breakup plan after it is approved by IAC's board.

"To fully grasp the unusual character of this dispute requires an understanding of two basic facts that rule the governance of IAC," wrote the judge, Vice Chancellor Stephen P. Lamb, in his opinion, which was released Friday after the close of stock market trading.

Those two facts are the dual voting structure of IAC, in which Liberty owns a 61.7 percent supervoting stake, and Mr. Malone's lack of control over those votes. In the early 1990s, Mr. Malone granted an irrevocable proxy giving Mr. Diller control over Liberty's votes -- essentially conferring on him the power of attorney over Liberty's voting stake.

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