WILMINGTON, Del. (CN) – Liberty Media is cheating shareholders by spinning off its Liberty Entertainment group to merge with DirecTV in a deal that will enrich Liberty Chairman John Malone, who also is a director of DirecTV, shareholders say in a Chancery Court class action.
The named plaintiffs – two pension funds – say the spun-off division will contain Liberty’s majority stockholding in DirecTV, and that “far from being ‘entirely fair’ to DTV and its public shareholders, the proposed transaction provides a windfall to Liberty and its largest shareholder, John C. Malone, a DTV director and Liberty’s chairman.
The $14 billion all-stock deal was proposed on May 3. Named plaintiffs – the Key West Police & Fire Pension Fund and The City of Roseville Employees’ Retirement System – say the deal is intended to “wrest voting control over DTV from the company’s public shareholders for inadequate consideration.”
Plaintiffs’ lead counsel is Stuart Grant with Grant & Eisenhofer.