UPDATE 2-Trial on IAC-Liberty spinoff dispute set for March
(Adds trial date, background, byline)
By Jon Hurdle
WILMINGTON, Del. Feb 1 (Reuters) - A Delaware court said on Friday a legal dispute between IAC/InterActiveCorp (IACI.O) and its controlling shareholder, Liberty Media Corp (LINTA.O), needs to go to trial, with a date set in March.
Delaware Chancery Court Vice Chancellor Stephen Lamb said at a hearing to discuss dueling lawsuits filed by the companies last week that he would not issue an immediate ruling.
"I am not going to decide it today," he added.
A trial was scheduled to start on March 10 or 11, according to a lawyer for IAC.
The two companies have waged an increasingly bitter battle over who will retain control of four units IAC plans to spin off into independent entities, including public name-calling between IAC Chairman and Chief Executive Barry Diller and his long-time business partner, Liberty Chairman John Malone.
Diller has proposed that the companies spun off operate under a single-tier share system that would dilute Liberty's control of IAC's businesses. Liberty holds about 30 percent of IAC but controls nearly 62 percent of its voting shares.
Malone opposes the recommendation and accuses Diller of breaching an agreement that allows Diller to vote Liberty shares on company matters.
Liberty had also requested that the court suspend the right of IAC's board to pursue the proposed spinoffs as well as any other non-routine business until it could deliberate on the dispute between the sides. Liberty's legal action against IAC includes a request to remove Diller and six other directors from the board.
Lawyers for both companies were working on an arrangement over how IAC's board will proceed. A lawyer for Liberty said the "status quo" request would be resubmitted to the court by Monday.
Kevin Abrams, representing Liberty, accused Diller of misusing the proxy voting rights during the hearing.
"He has told the court repeatedly that he is going to misuse the Liberty proxy to vote for the spinoff," Abrams said.
Lamb said he needed to see the evidence on both sides regarding Diller's proxy rights and said repeatedly he would not listen to the arguments on Friday.
"That's a question we are going to have to litigate," he added.
Some analysts say IAC would be best served by a settlement that could give Liberty control over one or two of the units to be spun off: the HSN shopping network and possibly the Ticketmaster box office service.
IAC also plans to spin off its Interval International time-share exchange and the LendingTree online mortgage service.
IAC shares were up 17 cents to $26.11 while Liberty Interactive Class A shares were up 50 cents, or 3.1 percent, to $16.41. (Reporting by Jon Hurdle, writing by Michele Gershberg, editing by Mark Porter/Leslie Gevirtz)
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