Intermix Media Agrees to Settlement In Shareholder Class Action
February 2011 - If you held the common stock of Intermix Media, Inc. from July 18, 2005 (i.e., the date that the acquisition of Intermix by The News Corporation (―News Corp.‖) for $12.00 per share was publicly announced) through and including September 30, 2005 (i.e., the closing date of the Acquisition), your rights may be affected by the settlement of a class action lawsuit pending in this Court. The Parties have reached an agreement to settle the Action for $45 million in cash that will resolve all claims in the Action. This Notice relates to a proposed Settlement of a class action lawsuit pending against defendants Brett Brewer, Daniel Mosher, Lawrence Moreau, David Carlick, Andrew Sheehan, Richard Rosenblatt, James Quandt, and William Woodward. The proposed Settlement, if approved by the Court, concerns all holders of Intermix common stock from and including July 18, 2005 through and including September 30, 2005. Subject to Court approval, Plaintiff, on behalf of the Class, has agreed to settle all claims relating to Defendants’ conduct in connection with the Acquisition that were or could have been asserted against Defendants in
the Action in exchange for a settlement payment of $45 million in cash.
In a ruling the Federal Judge George King of the U.S. District Court for the Central District of California denied in part the defendants’ motion to dismiss the lawsuit and therefore allowed the Intermix Media Inc. shareholders to proceed with a portion of their claims accusing that the company’s former executives, directors and institutional investors misled shareholders and sold the website Myspace.com to an unfair and too low price to News Corporation in 2005.
Intermix Media Inc. is the former owner of social networking site MySpace.com and has sold Myspace.com in 2005 for $580 million to the News Corporation. The shareholders accused that Myspace.com was sold for billions of dollars too little.
MySpace co-founder Brad Greenspan, former chairman and former chief executive of Intermix, reportedly said “I knew that the value of the company was billions of dollars. However, the deceptive practice of hiding MySpace financials by Intermix management robbed shareholders of their opportunity to adequately gauge the company’s value”. The lawsuit was filed in 2006 and claims MySpace was worth as much as $20 Billion.
M&A expert Tom Taulli said in 2006 that “This is probably one of the best acquisitions ever” and Laura Martin, an analyst with Soleil-Media Metrix, said “It obviously wasn’t a good deal for [ the original] shareholders,” and adds that “If they waited a year, they would have gotten $1 billion more.”
Judge George King dismissed in his ruling four claims including allegations of securities violations, but allowed the remaining two claims to proceed further. According to the complaint the remaining claims allege that the executives violated their fiduciary duty, or aided and abetted such violations, by making misleading statements to Intermix Media Inc. shareholders before the News Corporation acquisition. According to an amended complaint, News Corp. last year considered selling MySpace to Yahoo Inc. in a deal that valued the website at about $12 billion.