Barry Diller’s Match Group plans to pay out a whopping $441 million over claims that it cheated the founders of Tinder out of billions of dollars, the company said early Wednesday.
The payment comes just days before jurors in a dramatic Manhattan trial were set to deliver a verdict in a suit brought by Sean Rad and other Tinder co-founders who were seeking as much as $2 billion. The weeks-long trial saw heated testimony from Rad, Diller, former Match and Tinder CEO Greg Blatt and a host of other witnesses and experts over claims that Diller’s company rigged a key valuation process.
Rad claims that Tinder was unfairly valued at $3 billion because Diller allies shared “doom-and-gloom” numbers with outside investment banks — and that the hookup app should’ve actually been worth at least $13.2 billion.
The payout announced Wednesday will settle both Rad’s New York State Supreme Court suit and several other claims in arbitration over the contested valuation, which occurred in 2017, according to a brief Match Group filing with the Securities and Exchange Commission. Match — which also owns Hinge, OkCupid and PlentyOfFish — said that money for the settlement will come out of the company’s cash on hand, which stood at $523 million at the end of the third quarter.
Thomas Claps, a Susquehanna litigation analyst who closely watched the case, said a settlement makes sense for both parties since juries can be highly unpredictable.
“It became clear that Match had a lot of problems that they had to confront in terms of repeated evidence of potential corruption and potential undue influence over the entire valuation,” Claps told The Post. “I think they decided to cut their losses because they could’ve been facing a much higher reward of up to $2 billion.”
As for Rad and the other Tinder co-founders, Claps predicts a party.
“By securing a settlement on their own terms for nearly half a billion dollars, I think they’re likely very pleased,” Claps said. “The plaintiffs could’ve rejected any offer and allowed it to go to the jury but there’s significant risk there because the jury could’ve gone to zero.”
Indeed, the plaintiffs’ attorneys, Orin Snyder and Josh Dubin, said in a statement to The Post that they they were “very pleased that this valuation dispute has been settled.”
“It was a long and hard battle and our clients are grateful that they had the opportunity to have their voices heard and achieve this outcome,” they said in the statement.
The payment closes the door on a knock-down, drag-out trial in which Rad testified that the 2017 valuation process — which netted him nearly $400 million, but should’ve given him more than $1 billion, he said — left him with PTSD. Rad also claimed at one point that Blatt had tried to physically threaten him outside the courtroom by grabbing his arm, while Blatt claimed he was simply going in for a fist-bump with his former colleague.
The trial also saw testimony from a slate of bankers from Deutsche Bank, Barclays and Jefferies who were involved in the valuation process. While Rad didn’t accuse any banks of wrongdoing, he claimed Deutsche Bank and Barclays reached their valuation figures based on misleading information from Blatt and other executives at Match.
Match Group shares were trading up 3 percent in early Wednesday at $133.92 but have fallen 13 percent over the past month.
“Match investors have been very concerned about this case and looking at the stock price during the course of the trial — it was clear that investors were not comfortable with how this could play out,” Claps said. “Now that the trial is over and this issue is in the rearview mirror, it’s not surprising that the stock may be modestly up today.”
In addition to Rad — who co-founded Tinder while working for IAC incubator Hatch Labs in 2012 — other early Tinder employees including Justin Mateen, Jonathan Badeen and Ryan Ogle are set to receive payouts under the agreement.
Match spokeswoman Justine Sacco and Rad spokeswoman Brandy Bergman declined to comment.
Match had repeatedly slammed the suit as a “sour grapes” attempt by early Tinder employees to capitalize on the success of Match Group, which has exploded in value since 2017. The entire company including Tinder was worth around $5 billion at the time of the valuation and now has a market capitalization of nearly $40 billion.
“The parties are pleased to announce that they have settled the valuation lawsuit presently on trial in New York Supreme Court and the related valuation arbitration,” Match said in the SEC filing.
Opting for a messy court fight instead of a pre-trial settlement was an unconventional and risky move for Match Group, according to Claps.
“They wanted to try to lower that payout as much as possible by exerting pressure on the plaintiffs at trial and by presenting a solid case to the jury at trial,” the analyst said. “I don’t think that necessarily worked for Match.”