Expedia's board of directors has been named in a proposed class action that accuses them of allowing media mogul Barry Diller to orchestrate "side deals" in a merger with Liberty Expedia Holdings that robbed investors of the value of their shares.
An Expedia Group Inc. shareholder claims in a 120-page proposed class action that the company’s recent acquisition of Liberty Expedia Holdings, Inc. unfairly favored the interests of media mogul Barry Diller, who the plaintiff says orchestrated a scheme to pass on voting power in the company to his allegedly “unqualified” stepson, Alexander von Furstenberg.
Diller and von Furstenberg—son of fashion designer Diane von Furstenberg—are joined as defendants by Expedia’s other board members, including Chelsea Clinton, who the case says were influenced by Diller to unlawfully protect his interests over those of Expedia stockholders. The lawsuit out of Delaware state court claims Diller orchestrated several “side deals” with Expedia that will allow him to transfer otherwise untransferable voting power to von Furstenberg by converting his one-vote common shares into “super voting” Class B shares, even though, as the case tells it, “he had no right to receive any Class B shares” in the deal.
“Not content with merely retaining his own control during his lifetime, Diller will also get the right to transfer the Original Class B shares to [von Furstenberg], his likely future heir, who will have the added protection of Diller’s vestigial, crony-filled Board,” the heavily redacted complaint scathes. “In other words, Diller will own at least 49% of the voting power during his lifetime, and will be able to transfer control over approximately 29% of the voting power to [von Furstenberg], solely because of the Side Deals.”
The lawsuit notes that Expedia stockholders were not given any opportunity to vote on the proposed merger nor any of the alleged side deals.
The case claims the defendants breached their fiduciary duties by failing to protect the interests of Expedia stockholders when considering and executing the merger. As a result, Expedia is overpaying Liberty Holdings by five percent, the lawsuit says, which robs shareholders of the full value of their Expedia stock. From the complaint:
“Regardless of how valuable the 77-year old Diller believes he is, Expedia’s stockholders should not be saddled into perpetuity with the Diller family’s dynastic ambitions, and should not have been forced to accept an unfair Merger to appease Diller and his future heirs.”