IAC Inc

Overview

In the ordinary course of business, IAC and its subsidiaries may become parties to litigation involving property, personal injury, contract, intellectual property and other claims, as well as stockholder derivative actions, class action lawsuits and other matters. The amounts that may be recovered in such matters may be subject to insurance coverage. The litigation matter described below involves issues or claims that may be of particular interest to IAC's stockholders, regardless of whether such matter may be material to IAC's financial position or operations based upon the standard set forth in the rules of the Securities and Exchange Commission.

Shareholder Litigation Arising Out of the Match Separation

This shareholder class action pending in Delaware state court is described in detail under the captions Part I-Item 3-Legal Proceedings of our Annual Report on Form 10-K for the year ended December 31, 2023 (pages 34-35). See In re Match Group, Inc. Stockholder Litigation, No. 2020-0505 (Delaware Chancery Court). This lawsuit alleges that the terms of the Match Separation (as defined on page 32 of this quarterly report) are unfair to the former Match Group, Inc. public shareholders and unduly beneficial to IAC as a result of undue influence by IAC and Mr. Diller over the then Match Group, Inc. directors who unanimously approved the transaction and asserts a variety of claims. As previously reported, the Delaware Chancery Court granted the defendants’ motion to dismiss the action in September 2022, and the plaintiffs appealed to the Delaware Supreme Court. Following oral argument on the plaintiffs’ appeal, in May 2023, the Delaware Supreme Court issued an order directing the parties to submit supplemental briefing on the correct legal standard governing judicial review of the Match Separation, namely whether review under the more deferential business-judgment rule is triggered when such a transaction has been approved byeither a committee of independent directorsor a majority vote of the minority stockholders. Supplemental briefing was completed in September 2023 and the court heard further oral argument from the parties in December 2023.

On April 4, 2024, the Delaware Supreme Court issued its decision, holding that: (i) in order to be subject to review under the more deferential business-judgment rule, rather than “entire fairness” review, the Match Separation transaction must have been approved byboth a committee of independent directorsand a majority vote of the Match Group, Inc. minority shareholders, (ii) the Chancery Court correctly ruled that the plaintiffs had pleaded sufficient facts to call into question the independence of one of the three members of the special committee that had negotiated and approved the transaction, (iii) the Chancery Court had incorrectly ruled that the plaintiffs had nevertheless failed to call into question the independence of the special committee as a whole, because all members of the committee must be independent in order for the committee as a whole to be independent, and (iv) the Chancery Court had correctly dismissed the plaintiffs’ derivative claims for lack of standing, leaving only their direct claims for adjudication. The Delaware Supreme Court remanded the case to the Chancery Court for further proceedings.

On October 2, 2024, the Chancery Court issued an order: (i) granting Mr. Diller’s motion to dismiss the claims asserted against him individually and (ii) denying the motion to dismiss filed by five individual defendants who, at the time of the approval of the Match Separation by Match Group, Inc.'s board of directors, were both Match Group, Inc. directors and officers or directors of IAC. The case is currently in discovery. IAC remains confident in its ability to prevail on the merits and will continue to defend vigorously against the allegations in this litigation.