IAC's Diller battles Liberty in court testimony

By Michele Gershberg

WILMINGTON, Delaware (Reuters) - IAC/InterActiveCorp chief Barry Diller told a Delaware court on Thursday he had rejected "many, many times" the proposals for an asset swap from IAC's controlling shareholder, Liberty Media Corp, because they did not offer the proper value to IAC investors.

Diller also said he would be interested in a controlling interest in IAC if he could obtain the necessary amount of shares. He dubbed Liberty Chief Executive Greg Maffei an "irresponsible executive" who would not benefit IAC if he took an operating role.

With his role as IAC Chairman and CEO potentially at stake, Diller's testimony was a key attempt to refute claims made this week by Liberty at trial in Delaware Chancery Court.

IAC and Liberty are suing each other over Diller's proposal to spin off four of IAC's largest businesses in a manner that would dilute Liberty's voting control over the units.

The spin-off plan followed more than a year of inconclusive talks between the sides over swapping one of IAC's assets in return for Liberty's stake in IAC.

"We never accepted one of them because we never got to the value that was appropriate for IAC shareholders," said Diller, who built up the Internet conglomerate over more than a decade with the backing of his long-time friend, Liberty Chairman John Malone.

Asked by Liberty lawyer Kevin Abrams whether he would be interested in trying to seek control of IAC, Diller said, "Yes, if I could."

"I don't know how far I would get," he said. "I'm not sure the number of shares I would need to acquire I would (actually) obtain," he told the court.

IAC shares rose 4.4 percent to $20.31 in afternoon trading on Nasdaq as investors hoped the company would soon have some resolution of its legal dispute, whether in the form of a deal or a decision from Vice Chancellor Stephen Lamb.

SERVING SHAREHOLDERS

The trial is expected to wrap up after Diller's testimony, with a ruling to be issued within two to three weeks.

Liberty has argued during the trial that Diller's spin-off proposal aimed to put him in control of IAC at the expense of its outside investors. Diller maintains the plan was meant to serve all of the company's shareholders and not Liberty alone.

Diller also addressed another main Liberty argument -- that he had threatened to use his proxy to vote Liberty's 62 percent control over IAC to get his spin-off plan approved, despite Liberty's stated opposition to the control structure.

In court, Diller said that he did not make such a threat and that the authority to call a shareholder vote rested with the IAC board, of which Malone is a member.

He did say he was still committed to the plan, but would not proceed with it unless the court gave him permission.