Will IAC/Interactive's Break-Up Generate More Value?

Is the complex structure of IAC/Interactive (IACI) hiding the true value of the company?

Looks like we are about to find out. Barry Diller’s complicated conglomerate of Internet and retailing businesses this morning announced plans to break the company into five separate public companies. Shares of the new companies will be spun-out to existing IAC holders in a series of tax-free transactions.

The five companies will include:

• LendingTree, which also will include RealEstate.com, Domania, GetSmart, Home Loan Center and iNest.
• Interval International, including CondoDirect, Resort Quest Hawaii and VacationSource.com.
• Ticketmaster, including a variety of international ticketing sites, as well the company’s investment in iLike, a music service that has become a popular Facebook application.
• HSN, along with the company’s other retailing brands, including Cornerstone, Ballard Designs, Frontgate, Garnet Hill, Smith + Noble, TravelSmith and The Territory Ahead.
• IAC, which will include the rest of the current business portfolio, including Ask.com, CitySearch, Evite, Excite, Match.com, Shoebuy.com, Zwinky and a variety of other Web properties, as well as investments in Active.com, Brightcove, OpenTable, SHOP Channel, Points.com and other companies.

Barry Diller will remain Chairman and CEO of IAC. The other businesses will continue with their current CEOs: Mindy Grossman at HSN, Sean Moriarty at Ticketmaster, C.D. Davies at Lending Tree and Craig Nash at Interval.

The deal is expected to be completed in the second or third quarter of 2008.

IAC shares closed Friday at $29.62.

Comments

[DlphcOracl]

The answer to your question: "Will IAC/Interactive's Break-up Generate More Value ?" is a resounding "No !!". If you take a turd, slice it into 4 or 5 pieces you are now left with multiple little turds instead of one large one. However, the underlying value is not changed.

Barry Diller is a master Wall St. con-man and for years has convinced the gullible ANAL-ysyts that "the sum of his companies was worth more than they would be if you evaluated them individually", because of the "synergy" the IAC/Interactive umbrella created. Yeh, right. Isn't this what Citigroup (C) has been telling us for years as they made one dumb expensive acquisition after another ?? Diller is the Wall St. equivalent of the Wizard of Oz. When you look behind the curtain there is little there.

Smart investors will take a pass on the individual companies created and spun off from IAC. Can anyone say "Cendant" ?? Caveat emptor.