Liberty Media agrees to sell 7.5 million shares of IAC/InterActive

By Angela McDaniels

Tacoma, Wash., July 17 - IAC/InterActiveCorp. shareholder Liberty Media Corp. agreed to sell 7.5 million shares of the company's common stock under a variable forward sale contract, according to a schedule 13D/A filing with the Securities and Exchange Commission.

Liberty Media entered into the contract with a financial institution on June 10.

The contract involves two tranches. Liberty Media will sell 6,725,000 shares to the counterparty in the first tranche and 775,000 shares in the second.

Both tranches will be sold on the third trading day after Jan. 27, 2010.

The price paid per share will be equal to the stock price at the time of settlement, subject to a floor of $16.0363 per share for the first tranche and $16.0727 for the second. The price is also subject to a cap of $16.3603 per share for the first tranche and $16.3974 for the second.

The limits for the first and second tranches were set on July 13 and July 15, respectively, and are based on the weighted average price per share used by the counterparty to establish its initial hedging position.

If it chooses to, Liberty Media can settle the contract in cash instead of shares. It may also borrow from the counterparty the present value of the counterparty's minimum payment obligation under the contract.

Liberty Media, an Englewood, Colo., entertainment company, beneficially owns 40,306,301 shares, or 26.7%, of IAC/Interactive, a New York-based internet company.

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