IAC Sells Vivendi Stake

Barry Diller’s IAC/InterActiveCorp said June 8th that it has sold its 5.4 percent stake in Vivendi Universal Entertainment to NBC Universal for about $3.4 billion in cash and shares. The deal bolsters IAC’s shift from television to multimedia and retail.

IAC shares surged $1.10 to $25.74 during early afternoon trading on Nasdaq while NBC owner General Electric shares edged up 12 cents to $36.96 on the New York Stock Exchange.

As part of the deal, IAC and Vivendi Universal agreed to permanently dismiss litigation between them now pending in Delaware courts. The truce will end the sour alliance that came about after Diller – the former head of Paramount Pictures and the Fox Television Network – sold the USA Network and other cable properties in 2002.

Additional terms of the deal state that IAC will get back about 56.6 million shares of its own stock that had been held by Vivendi Universal, as well as $865 million from the sale of the U.S. Treasury bonds that had secured its interests.

Vivendi Universal is also paying an additional $235 million in cash while GE is chipping in $800 million, including $100 million of free advertising that IAC will be able to use on NBC or one of its other television networks.

In the meantime, shedding Vivendi Universal enables IAC to intensify its focus on a stable of popular Web sites that include Ticketmaster, LendingTree, Match.com and Evite.com. The company hopes to accelerate its growth later this year after it completes its pending $2 billion acquisition of Ask Jeeves Inc., a popular Internet search engine.

IAC also owns online travel agency Expedia, but is preparing to spin that off along with Hotels.com and Hotwire.com to make it easier for investors to grasp the value of its vastly different holdings.