Barry Diller swaps John Malone out of IAC


Longtime business partners Barry Diller (pictured) and John Malone have seen their relationship become strained in recent years, even leading to litigation. Now they are no longer partners in IAC/InterActiveCorp. – and Diller is no longer running day-to-day operations.

In a series of swap transactions executed on Wednesday (12/1) and publicly announced on Thursday, IAC and Malone’s Liberty Media Corporation went their separate ways. First off, Diller exchanged approximately 4.3 million shares of IAC common stock held by him for an equal number of shares of Class B common stock held by Liberty. “This exchange took place pursuant to the terms of a pre-existing stockholders agreement between Mr. Diller and Liberty,” the announcement stated.

Liberty then exchanged its entire equity stake in IAC for a combination of operating assets and cash in a transaction intended to be tax-free to Liberty and IAC. Liberty exchanged approximately 12.8 million shares of IAC stock (consisting of approximately 8.5 million shares of Class B stock and 4.3 million shares of common stock, and representing approximately 60% of the total votes of all classes of IAC stock) for all of the capital stock of a wholly-owned subsidiary of IAC that holds the Evite and businesses, and approximately $220 million in cash. These assets will be attributed to the Liberty Interactive tracking stock group, the announcement said.
Following the transactions, Diller now owns shares representing approximately 34% of the total votes of all classes of IAC stock. He is the largest shareholder. But he has decided to hand over the reins of the company to Greg Blatt, who has been named CEO and a director of IAC. Diller has assumed the role of Chairman and Senior Executive.

“It’s been clear to me for some time that this Company needs a full time aggressive and aspirational executive in the CEO role.  While I’m  not going anywhere, IAC, with its operating businesses growing, large cash resources and virtually no debt, needs the kind of leadership that Greg Blatt can bring it in order to continue to grow and thrive many years into the future,” said Diller.

Blatt joined IAC in 2003 as General Counsel and has been CEO of since February 2009.

“The one constant throughout IAC’s history has been change. While I expect that to continue, we intend for the same emphasis on consistent operating performance and disciplined deployment of capital that have defined our recent quarters to guide our decision-making and management as we grow IAC into the future.  Our businesses are on solid footing, and our healthy balance sheet and strong operating cash flows put us in a great position to drive solid shareholder returns for the foreseeable future.  I couldn’t be more excited about the new position and the opportunities in front of IAC,” said Blatt.

Despite their past disputes, Diller and Malone issued glowing statements about each other.

“These last 17 years of my association with John Malone and Liberty Media have been a great, and occasionally, wild ride. We began this grand tour of interactivity a few years before the internet became widely used, and we were able to create, acquire and build up substantial businesses over that time. While I’ll continue my association with Dr. Malone in Expedia, and as significant shareholders of the multiple spun-off companies, Liberty’s exit from IAC is a turning point, and I want to state my thanks and gratitude to Dr. Malone for his support and encouragement throughout (with one brief period of mutual discontent which we both believe was an aberration). This has been a most productive partnership and I’m glad it will continue in other venues,” said Diller.

“We are pleased to welcome Evite and to Liberty Interactive’s eCommerce companies. These companies are established leaders and build on our strength in specialty commerce.  Our 17-year relationship with Barry has been very beneficial in creating value for our shareholders, and this transaction represents an efficient exit for Liberty from our IAC stake.  We will continue to work together through Expedia and various other public vehicles created from our association,” said Malone.

RBR-TVBR observation: The end of the road for this collaboration? Not necessarily. These are big boys who know how to play rough and tumble at business. If they see a new opportunity where the participation of the other would be helpful, you can bet that they’d jump right back in to make money together again.