MySpace founder demands cancellation of deal with News Corp

    Now that sites like YouTube and Facebook are valued at billions of dollars , many people recall last year’s deal with MySpace. The largest social network was sold for just $ 580 million. Its current owner is News Corp. already, in fact, paid off the investment, because it entered into an advertising contract with Google worth $ 900 million . MySpace revenue for the current year will be about $ 250 million.

    What is it? After last year’s deal, the MySpace portal magically turned into a super-profitable company and began to bring huge amounts of money to its new owners?

    In such a situation, the question naturally arises: was the price for which I bought Intermix, the owner of MySpace, too low? One of the founders of Intermix and its former CEO, Brad Greenspan (Brad Greenspan) assures that it is so. From the very moment of the transaction, he made statements that the cost of Intermix was clearly underestimated, and the real price of the company at that time was tens of billions of dollars. The people who pulled the deal, according to Greenspan, have tricked Intermix shareholders.

    Although after the deal with News Corp. more than a year has passed, but Brad Greenspan continues his struggle to this day. The other day, he released a large report in which he detailed all his arguments.

    According to Greenspan, Intermix had a fair price of $ 20 billion. He claims that insiders knew that the value of the business would soon be close to $ 20 billion, but the deal was carried out as quickly as possible and at a lower price. No one explained to shareholders that the company's revenue is growing at 1200% per year. They were persuaded to approve the deal as quickly as possible.

    Thus, Intermix shareholders (and the largest of the private shareholders - Brad Greenspan himself) were deceived. The responsibility for this scam lies with the two top managers who organized the fraud: these are Richard Rosenblatt from Intermix and Ross Levinsohn from News Corp. They deliberately prevented the start of a standard auction and did not inform shareholders about the proposals of competitors.

    Based on all this, Greenspan insists that an investigation is urgently needed before the evidence of deception has been destroyed. Greenspan filed a lawsuit in February 2006 against News Corp. He believes that the deal should be canceled, and Intermix and MySpace should be removed from News Corp.

    True, there are several weaknesses in the arguments of the former director of the company. The main thing is that Intermix at the time of purchase was a public corporation and its shares were listed on the stock exchange. So, the market capitalization was lower than the price paid by News Corp. If such excellent business prospects were as obvious as they are now, then the value of the stock would naturally increase. Today, many experts estimate MySpace at tens of billions of dollars, but a year ago, few would dare to make such an assessment.

    Nevertheless, the purchase of MySpace may well turn into one of the most scandalous deals in US history.

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