Liberty Media's John Malone, a longtime business partner of Barry Diller, took action Monday to oust Diller from the board of the IAC/InterActiveCorp Internet conglomerate.
IAC
The move is the latest in dueling lawsuits the two sides have filed in Delaware courts, following the announcement by IAC that it would break into five separate publicly traded companies. Liberty says that would rob the media holding company of its shareholder voting power.
In a response to Liberty's actions, Diller said in a statement: “After reading this new salvo, I am beginning to think these people are insane. Everything they cite is hogwash. First of all, we have never asked the board to take action on any specific proposal high, low or no-vote. What we have done, which we thought was the responsible thing to do given this conflict, is to go to the Delaware court and ask them to tell us what rights IAC has or doesn’t have.”
Malone's lawyers sought the removal of seven IAC board members in all, including Diller, his wife the designer Dianne Von Furstenberg, Edgar Bronfman Jr. and Steven Rattner.
Diller has long controlled Liberty Media's voting rights in board matters, per a proxy, but Liberty lawyers argue those rights have expired.
In November, Diller announced plans for the IAC to spin off its HSN home shopping network, Ticketmaster ticketing service, Interval time-share business and LendingTree mortgage referral units.
But in IAC board meetings earlier this month, Liberty Media CEO John Malone challenged the breakup plan, saying it would rob Liberty of its shareholder voting power.
Liberty Media owns about 23 percent of IAC common stock, which is entitled to one vote per share, and all of its outstanding Class B common stock, which carries 10 votes per share. The company thus owns about 30 percent of IAC equity but 62 percent of the voting power of its outstanding stock.
Under the breakup plan approved by IAC directors, each of the spin-off companies would have a single-tier voting structure, with each share of common stock having equal voting power. Liberty's voting power thus would shrink to about 30 percent in the spin-off companies.
In a complaint filed in Delaware Chancery Court on Wednesday, attorneys for IAC asked that the spin-off plan and one-tier voting structure be declared proper under IAC's bylaws and certificate of incorporation.
Liberty responded with its own lawsuit a day later, accusing Diller of staging a "corporate coup" and breaching a stockholders agreement that gives him proxy authority to vote Liberty's stock. According to court papers, Diller intends to vote Liberty's IAC shares in favor of any spin-off transaction requiring IAC shareholder approval.
New York-based IAC owns the Ask.com search engine, Citysearch, Evite and Match.com.