As stated in the joint announcement IAC (NSDQ: IACI) has filed a long 10-12B document detailing the spin off of four of its subsidiaires. Starting on page 221, the company lays out the details of its separation agreement with Liberty. “The Spinco Agreement generally provides that so long as Liberty beneficially owns securities of a Spinco representing at least 20% of the total voting power of the Spinco’s equity securities, Liberty has the right to nominate up to 20% of the directors serving on the Spinco Board of Directors (rounded up to the nearest whole number).” The section lays out a number of conditions on Liberty relating to acquisition restrictions, the standstill agreement, transfers (Liberty transfering its shares to a third party) and competing offers. This last point—competing offers—is key, because it’s the potential for a third party to come in, that frees Liberty’s hands:

-- “If a third party (x) commences a tender or exchange offer for at least 35% of the capital stock of the Spinco other than pursuant to an agreement with the Spinco or (y) publicly discloses that its ownership percentage (based on voting power) exceeds 20% and the Spinco’s Board fails to take certain actions to block such third party from acquiring an ownership percentage of the Spinco (based on voting power) exceeding the Applicable Percentage, the Liberty Parties generally will be relieved of the obligations described under “Standstill Restrictions” and “Acquisition Restrictions” above to the extent reasonably necessary to permit Liberty to commence and consummate a competing offer.”

In other words: If, say, some online financial company comes along and tries to buy LendingTree (or Tree.com as it’s known as in the filing), Liberty isn’t bound by the acquisition restrictions not to put up a competing offer.

We’ve posted the short- form of the spinco agreement. 

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