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Diller to Split His Conglomerate 5 Ways
Barry Diller has complained that the "conglomerate discount" has been a drag on IAC's stock price. The company's shares jumped 7.5 percent yesterday.
(By Joe Cavaretta -- Associated Press)
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Also yesterday, Diller announced that IAC had renewed its contract with Google to provide IAC Web sites with sponsored search results, a five-year deal that he estimates will be worth more than $3 billion in revenue.
[an error occurred while processing this directive]In IAC's third-quarter earnings, released last week, the company reported a 7 percent gain in revenue from the comparable period last year and a 4 percent decline in profit, attributed largely to dips at HSN and LendingTree.
IAC has $1.4 billion in cash and a light load of long-term bonds. The new IAC will retain most of the cash and decide how to disburse capital to the spinoffs. IAC shareholders will own all of the equity in the five new companies, and Diller said his involvement in their activities will be at the board level.
IAC's products span 12 business sectors, and Diller has often complained that the conglomerate discount has kept its share price lower than it should be.
Shares of IAC shot up 13 percent after yesterday's announcement and closed up 7.5 percent, at $31.84 per share.
Diller, who is a director of The Washington Post Co., said that over the summer he sought the advice of Jack Welch, his long-time mentor and former head of General Electric -- a conglomerate of its own -- about splitting up IAC.
Had IAC continued as a conglomerate, Diller said, he feared it would end up "being superficial almost everywhere."
