IACI To Break Into 5 Companies (Thank Heavens)

The break-up can’t come quickly enough for this hodge-podge, dead-in-the-water conglomerate.  Release after jump.

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IAC Announces Plan to Spin Off HSN, Ticketmaster, Interval and LendingTree as Four Publicly Traded Companies

NEW YORK – November 5, 2007 – IAC (Nasdaq: IACI) announced today that its Board of Directors has approved a plan to separate IAC into five publicly traded companies:  

IAC, which will include:

  • The businesses currently comprising its Media & Advertising sector: Ask.com, Bloglines, Citysearch, CursorMania, IAC Advertising Solutions, Evite, Excite, InsiderPages, iWon, My Fun Cards, My Way, Popular Screensavers, Smiley Central, Webfetti and Zwinky;
  • Match.com, ServiceMagic, Shoebuy.com, Entertainment Publications and ReserveAmerica;
  • The businesses currently comprising its Emerging Businesses sector: Black Web Enterprises, BustedTees, CollegeHumor, GarageGames, Gifts.com, Green.com, InstantAction, Primal Ventures, Pronto, Very Short List, Vimeo and 23/6;
  • IAC’s current investments in Active.com, Brightcove, FiLife, Medem, MerchantCircle, OpenTable, Points.com and SHOP Channel.

•HSN, which will include the primary businesses currently comprising IAC’s Retailing segment, including HSN TV, hsn.com, and the Cornerstone Brands, Inc. portfolio of catalogues, web sites and retail locations, including Alsto’s, Ballard Designs, Frontgate, Garnet Hill, GrandinRoad, Improvements, Isabella Bird, Smith+Noble, The Territory Ahead and TravelSmith;

Ticketmaster, which will include its domestic and international operations including Admission.com, Biletix, Billetnet, BillettService, Cottonblend, Echomusic, Kartenhaus.de, Lippupalvelu, LiveDaily, TicketService, Tick Tack Ticket, TicketWeb and Ticnet.se, as well as Ticketmaster’s current investments in Frontline and iLike;   

Interval International, which will also include CondoDirect, Resort Quest Hawaii and VacationSource.com;

LendingTree, which will also include RealEstate.com, Domania, GetSmart, Home Loan centre and iNest.  

“We’ve been a complex enterprise almost from the very beginning 12 years ago, with hundreds of transactions over those years. And while we’ve created a lot of value, I’ve always believed our complexity and many mouthfuls of sentences to explain who we are and what our strategy is have hampered clarity and understanding with all our constituencies, particularly investors,” said Barry Diller, Chairman and Chief Executive Officer of IAC.  “One of the reasons we’ve stayed with some of our more transactional businesses is that we needed their earnings to allow us to invest in emerging Internet businesses. Now that we have real scale in the pure Internet units, it makes nothing but sense to me to reorganize the whole. Each of these spun-off businesses is in fact a distinct business sector, and each will benefit from standing on its own, with its own capital structure, its own currency which will enhance its ability to attract and retain superior talent and make acquisitions, and a focused story investors can clearly understand and buy into:

HSN I believe now has a solid strategy and the leadership to thrive as a ‘pure play’ retailer.

Ticketmaster is entering the most dynamic era in its history and its ability to participate fully (with its own currency) in shaping the live entertainment industry is critical.

Interval will be flat out a great stand-alone company.

LendingTree, obviously under pressure from the macro real estate and mortgage environment, is nevertheless a valuable asset with a great brand and will be freed to participate fully with its own currency.

And IAC, well, IAC becomes a truly integrated Internet conglomerate with over 30 brands with great growth, solid revenues and earnings and a pristine balance sheet.”

IAC will retain substantially all of the Company’s cash and the new companies will be appropriately capitalised.

Barry Diller will continue as Chairman and Chief Executive Officer of IAC. Mindy Grossman, Sean Moriarty, CD Davies and Craig Nash will continue as Chief Executive Officers of HSN, Ticketmaster, LendingTree and Interval respectively, and Bret Violette will continue as President of RealEstate.com.

Upon completion of the transaction, IAC’s shareholders will own 100% of the equity in all five companies (IAC, HSN, Ticketmaster, Interval and LendingTree). The transaction is expected to be tax-free for both IAC and its shareholders.   

It is contemplated that outstanding IAC stock options and restricted stock units held by employees will be adjusted in a fair and equitable manner into either options or restricted stock units of the company with which each employee remains (IAC, HSN, Ticketmaster, Interval or LendingTree) following the transaction or comparable equity in the five separate companies.  Appropriate adjustments will be made to all awards so that pre-transaction value will be maintained immediately following the transaction.

The transaction is subject to a number of conditions, including final approval of transaction specifics by IAC’s Board of Directors, receipt of an opinion of counsel regarding the tax-free nature of the transaction, receipt of a solvency opinion from a valuation expert to address IAC net asset position, capitalisation and financial capability, after giving effect to the transaction, and the filing and effectiveness of registration statements with the Securities and Exchange Commission.  The proposed spin-offs are expected to be completed in the second or third quarter of 2008.

IAC will audiocast a conference call with investors, analysts and press to discuss the  transaction on Monday, November 5, 2007, at 11:00 a.m. Eastern Time (ET). The live audiocast is open to the public at http://www.iac.com/investors.html.

Hat tip to 24/7 Wall St

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