Business

Barry Diller’s media empire settles legal battle with Tinder founders

Match Group has agreed to pay the founders of Tinder $441 million to settle a lawsuit in which the founders of the dating app claim that the media empire run by Barry Diller tricked them out of The fortune is generated from one of the hottest digital media assets in recent years.

The settlement took place in the middle of a trial in New York state court, where Sean Rad and several others had Build Tinder in Los Angeles a decade ago, asked a jury to award them more than $2 billion from Match and its former parent company, IAC.

Court proceedings over the past three weeks have stood out testimony from Rad, Diller and others entered into a 2017 transaction that acquired the founders, who collectively hold one-fifth of Tinder’s shares, for about $600 million, implying an aggregate valuation. Tinder’s case is $3 billion.

Rad and the founders then sued, claiming that the app was actually worth $13 billion at the time. The founders claim that Match and IAC executives have acknowledged that Tinder is worth much more than its $3 billion acquisition valuation, and even compared its trajectory to Uber and Twitter.

Rad and his team originally developed Tinder at Hatch Labs, a tech incubator that IAC funded to build internet startups. In 2014, Rad negotiated a deal in which Tinder was given “put” options so that it could resell its interest in the company to IAC at four specific intervals starting in 2017 and ends in 2021.

After the first deal process in 2017, where independent investment bankers valued Tinder at $3 billion, IAC immediately merged Tinder into the broader Match company, canceling events. future and forced Rad and its founders to accept a $3 billion valuation.

Match Group, which now includes Tinder and several other dating sites, has since seen its business value skyrocket to $50 billion. Wall Street analysts describe much of that number to Tinder.

Match and IAC argued that Rad – who immediately sold the IAC shares his Tinder equity converted to in 2017 – suffered from “seller’s remorse” and that he had opportunity in the valuation process to argue that Tinder is worth more.

While the trial was nominally about business valuation, the internal drama at IAC, which has nurtured digital stars like Expedia and Vimeo for years, has spilled over into the public domain.

Emails shown during testing revealed that Diller shared his excitement about Tinder with Rad, telling him in a 2014 email that his personal yacht fleet was using the app. this. Rad was later fired from his position as Tinder’s chief executive officer on two separate occasions, as the IAC management team questioned his maturity.

Match, whose stock has fallen 14% in the past month, said it will pay its cash payout. Analysts at Susquehanna Financial Group had previously identified a possible compromise between $300 million and $700 million.

Sean Rad’s rep declined to comment. Match Group declined to comment.

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