HONOLULU--(BUSINESS WIRE)--UNITE HERE Local 5 raised concerns today about whether the QVC and HSN merger will be a fair deal for stockholders. Liberty Interactive Corporation, which owns 38.2% of HSN Inc., will acquire the remaining shares to merge HSN into its QVC Group and then spin the entity off as an asset-backed security. John Malone, chairman of Liberty Interactive, holds 37.9% of the voting power of Liberty.
Local 5 is concerned about Liberty Interactive’s dual-class system of stock and its impact upon shareholder control in the merged company. If Malone’s ownership holdings stays the same, he will control roughly 35% of the vote in the new company, based on his ownership of 27.6 million Class B shares of QVC, which are worth ten votes each compared to Class A shares. Malone’s influence may increase since Liberty stated it will continue repurchase of QVC common stock after the merger. In addition to Malone’s 38% control, four entities held a combined 13% of Liberty’s voting power.
In 2016, Liberty did not pay a regular cash dividend and stated it has no intention of doing so. By contrast, HSN shareholders in 2016 enjoyed an annualized dividend of $1.40/share, or a 4% yield at year end. Although HSN shareholders will receive a 29% premium from Liberty, HSN’s stock price is half of what it was two years ago.
Local 5 has been unable to locate a successorship plan for Malone’s ownership shares. Malone will be seventy-seven years old next year. Local 5 urges stakeholders of QVC and HSN to ask about the successorship plan for his shares.
About UNITE HERE Local 5: UNITE HERE Local 5 is the Hawaii branch of the UNITE HERE labor union, which represents over 270,000 North American members and has a strong history of consumer advocacy. UNITE HERE works to improve shareholder rights and is a member of the Council of Institutional Investors. Its members are beneficiaries of pension funds with over $60 billion in assets. There is a labor dispute at a hotel operated by a subsidiary of ILG; Liberty Interactive holds a 13% interest in ILG.