John Malone’s Liberty Media doesn’t object to Barry Diller’s plan to split IAC/InterActiveCorp into five companies, but Malone doesn’t like the idea of the four new companies each having a single tier of stock, rather than IAC’s two-tier structure that has Liberty holding super-voting stock. Malone had threatened to sue, but Diller beat him to it, asking the Delaware Chancery Court to rule that the spin-offs can go ahead. Then Liberty filed its own suit.
Liberty’s super-voting stock gives it control of IAC – except that it doesn’t actually have that control. Liberty backed Diller in creating IAC and owns about 30% of the company. Diller, however, holds the proxy to vote those shares, with voting power of more than 60%, so long as he is CEO of IAC.
As it stands, the four spin-offs from IAC (11/6/07 RBR #217) will each have a single class of voting shares, so Liberty, while it would be a very large shareholder, would not have voting control. So, while Malone, who is on the IAC board of directors, joined in the unanimous vote in favor of the five-way split, he doesn’t like that provision.
Under the dueling lawsuits, Diller is asking the Delaware court to rule that he has the right to vote the Liberty proxy however he wants and Liberty wants a ruling that Diller doesn’t have the right to vote the proxy in a way that will dilute Liberty’s voting power in the new companies.