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NEW YORK -(Dow Jones)- Brad Greenspan, the former chief executive of Intermix Media Inc., filed a complaintThursday against his former company and venture-capital firm VantagePoint Venture Partners over Intermix´s sale last year to News Corp. (NWS).
Greenspan charged Intermix directors with failing to carry out their fiduciary duties in the sale of the company that ran the popular social-networking site MySpace.com. The suit claims that the directors - including Richard Rosenblatt, Intermix´s CEO at the time of the deal - sought personal gains and failed to act in the shareholders´ best interests.
"News Corp. functioned as the ´escape hatch´ for a band of individuals, including Vantage Point, which had effectively picked the pocket of Intermix shareholders in a series of self-serving transactions," Greenspan said in a statement. "It is unbelievable that News Corp. obtained a property that is half the size of Google and Yahoo ... for the ridiculous sum of $580 million."
Greenspan said in an interview that he believes that MySpace could have fetched a price in the "tens of billions of dollars" in a proper auction. He noted the $2.2 billion market value of CNET Networks Inc. (CNET), which has fewer unique visitors than MySpace.
With more than 50 million registered users, MySpace is one of the most popular social-networking sites on the Internet. The site, frequented by young adults, has become popular as a forum to post music, share photos, and meet people. News Corp. plans to develop the site into more of a full-fledged portal in order to challenge Yahoo Inc. (YHOO) and Google Inc. (GOOG) for Internet advertising dollars.
In October 2003, Greenspan was ousted from Intermix, which was then called eUniverse Inc., following revelations of accounting irregularities, a subsequent earnings restatement, and an ensuing power struggle. He claims VantagePoint was behind his departure.
Greenspan, who owned more than 10% of Intermix´s shares at the time of the deal, tried to outbid News Corp. for Intermix in September 2005, but was thwarted by Intermix´s management, which advised against his offer. At the time, Rosenblatt said Greenspan´s offer "lacked credibility" and wasn´t "superior" to News Corp.´s bid. The deal closed in early October 2005.
The complaint, filed in Los Angeles County Superior Court, amends an earlier lawsuit filed in August by Greenspan, who had another lawsuit against Intermix dismissed last year. The case is running parallel to legal action from other former Intermix shareholders about the price paid by News Corp.
The latest complaint alleges that Intermix´s board members were concerned about legal ramifications from insider stock sales and were seeking gains such as the acceleration of stock options.
Greenspan claims VantagePoint was part of Intermix´s "control group" along with the board of directors. In the filing, he cites an email from Rosenblatt to VantagePoint that says: "no deal unless I stay long term. remember your vesting promise."
The News Corp. unit shrugged off Greenspan´s latest legal maneuver. "This is a belated copycat lawsuit that is completely without merit, and an interesting tactic for someone that didn´t vote against the merger," said Rick Stone, an attorney with law firm Hogan & Hartson who represents Intermix.
Greenspan said he abstained from the vote and had no choice but to surrender his shares because of the structure of the deal.
VantagePoint didn´t immediately respond to requests for comment.
NEW YORK -(Dow Jones)- Brad Greenspan, the former chief executive of Intermix Media Inc., filed a complaintThursday against his former company and venture-capital firm VantagePoint Venture Partners over Intermix´s sale last year to News Corp. (NWS).
Greenspan charged Intermix directors with failing to carry out their fiduciary duties in the sale of the company that ran the popular social-networking site MySpace.com. The suit claims that the directors - including Richard Rosenblatt, Intermix´s CEO at the time of the deal - sought personal gains and failed to act in the shareholders´ best interests.
"News Corp. functioned as the ´escape hatch´ for a band of individuals, including Vantage Point, which had effectively picked the pocket of Intermix shareholders in a series of self-serving transactions," Greenspan said in a statement. "It is unbelievable that News Corp. obtained a property that is half the size of Google and Yahoo ... for the ridiculous sum of $580 million."
Greenspan said in an interview that he believes that MySpace could have fetched a price in the "tens of billions of dollars" in a proper auction. He noted the $2.2 billion market value of CNET Networks Inc. (CNET), which has fewer unique visitors than MySpace.
With more than 50 million registered users, MySpace is one of the most popular social-networking sites on the Internet. The site, frequented by young adults, has become popular as a forum to post music, share photos, and meet people. News Corp. plans to develop the site into more of a full-fledged portal in order to challenge Yahoo Inc. (YHOO) and Google Inc. (GOOG) for Internet advertising dollars.
In October 2003, Greenspan was ousted from Intermix, which was then called eUniverse Inc., following revelations of accounting irregularities, a subsequent earnings restatement, and an ensuing power struggle. He claims VantagePoint was behind his departure.
Greenspan, who owned more than 10% of Intermix´s shares at the time of the deal, tried to outbid News Corp. for Intermix in September 2005, but was thwarted by Intermix´s management, which advised against his offer. At the time, Rosenblatt said Greenspan´s offer "lacked credibility" and wasn´t "superior" to News Corp.´s bid. The deal closed in early October 2005.
The complaint, filed in Los Angeles County Superior Court, amends an earlier lawsuit filed in August by Greenspan, who had another lawsuit against Intermix dismissed last year. The case is running parallel to legal action from other former Intermix shareholders about the price paid by News Corp.
The latest complaint alleges that Intermix´s board members were concerned about legal ramifications from insider stock sales and were seeking gains such as the acceleration of stock options.
Greenspan claims VantagePoint was part of Intermix´s "control group" along with the board of directors. In the filing, he cites an email from Rosenblatt to VantagePoint that says: "no deal unless I stay long term. remember your vesting promise."
The News Corp. unit shrugged off Greenspan´s latest legal maneuver. "This is a belated copycat lawsuit that is completely without merit, and an interesting tactic for someone that didn´t vote against the merger," said Rick Stone, an attorney with law firm Hogan & Hartson who represents Intermix.
Greenspan said he abstained from the vote and had no choice but to surrender his shares because of the structure of the deal.
VantagePoint didn´t immediately respond to requests for comment.
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