The WSJ’s Jessica
Vascellaro has an interesting article about what Jeff Bercovici calls
the "Diller-Malone marriage": two media moguls fighting over control
of a bunch of internet properties which presently goes by the unwieldy name
of IAC/InterActiveCorp. IAC bought also-ran search engine ask.com in 2005, for
stock, a decision Malone is unhappy about:
"If it had been me, I would have been willing to pay a higher price"
to do a cash transaction, Mr. Malone says. "Barry doesn’t use his balance
sheet effectively. He is not a financial guy."
Now I understand that Malone would like more leverage in IAC, and if he can’t
persuade Diller to get there through financial engineering, he’d be just as
happy to see IAC’s cash pile run down through acquisitions. But it seems to
me a bit of a stretch to go from there to saying that he would actually be willing
to pay more for ask.com if he was paying in cash than if he was paying
Generally, in any M&A deal, an all-cash transaction is the gold standard,
the benchmark against which all other deals are measured. Typically you need
to pay more, if you’re paying in scrip. If Malone is going to go on the record
about Barry Diller being "not a financial guy," then he might want
to use a better example than Diller’s refusal to pay a premium for the privilege
of paying in cash.