Murdoch's bold bid for the Journal

cnnmoney ^ | May 1, 2007 | Paul R. La Monica

[drellberg]

"NEW YORK (CNNMoney.com) -- News Corp. has made an unsolicited $5 billion bid to buy Dow Jones & Co. - an offer that could prove tough for the Bancroft family that controls the publisher of The Wall Street Journal to turn down, industry analysts said Tuesday.

Nonetheless, some members of the family indicated late Tuesday that they would, in fact, oppose the deal, raising the possibility that other companies could bid for Dow Jones."

[drellberg]

I know this has been posted. I know folks hate CNNMoney. But there are links here to other media stocks. One can learn a lot from how investors react. Some points: i) DJ stock price remains near Murdoch's bid, so investors are not at all writing this off, despite the family's opposition; ii) despite this bid, and Sam Zell's takeover of Tribune last month, the NY Slimes, Wash Post, etc, are still very much in the tank. Even if everyone believes Murdoch's bid will fail, it still OUGHT to signal that these newspaper franchises are undervalued. Zell's takeover should reinforce this. But investors are still every bit as down on the NY Slimes as always. Very revealing in my humble opinion. More evidence that the dinosaur media are beyond redemption.

In looking at Wall Street's reactions, does anyone else have any thoughts?

[Ernest_at_the_Beach]

Dow Jones to take no action on Murdoch bid
Board says 52% of voting power is opposed to News Corp. takeover offer

**********************EXCERPT**************************

The Bancrofts didn't know they would be under pressure to express a preference until Tuesday, when CNBC broke the news of the offer, the Journal said. Even with the Ottaways' opposition, a defection by a small number of Bancroft family members could swing the vote the other way, according to the Journal report. The delays could provide cover for Mr. Murdoch to attempt to negotiate with individual family trustees, the paper said.

The independent directors are in a delicate position; if the family remains steadfastly against a sale, the board can't override it, according to the report. That essentially moots the board, which is typically a company's most important instrument for negotiating any transaction and which typically clings to its fiduciary duty to secure the best outcome for investors.

Without the family's voting sway, the board reportedly would almost certainly vote to approve the offer, which represents a premium of roughly 67% over Dow Jones's closing price Monday.

One person close to the family said that some members could ultimately settle on a deal, adding, according to the Journal, that, "They're not all together."

Generational rift

A generational rift has taken shape, with older family members more resistant to Murdoch's overture, the Journal report stated, echoing a widely cited 2003 New Yorker story. The Journal report added that a sweetened offer would be the most direct way to win more support.

Short of that, Murdoch might also consider offering a higher price for the company's supervoting shares than for common stock, the Journal said, noting that, while such arrangements are typically abhorred by shareholders, they are legal.

Another scenario could involve family members who wish the company to remain independent buying the shares of their relatives who want to sell, the Journal said. When Class B shares are sold, they convert to nonvoting stock, but there exists an exemption for selling to other family members, according to the report.

The Journal said there is another consideration for those who might oppose the bid: The company's certificate of incorporation states that it has some latitude to consider the effect "of such a transaction upon the independence and integrity of the corporation's publications and services and the social and economic effects of such actions."

Wachovia analyst John Janedis downgraded Dow Jones shares to market perform Wednesday, citing the sharp appreciation of the stock this week and the belief that a higher offer from a rival bidder is unlikely.

[DemEater]

I only hope they turn the WSJ into as jurnalistically significant publication as the NY Post.

[gcruse]

“a higher offer from a rival bidder is unlikely”

Agree. No one’s crazy enough to overpay for dinosaur media without having synergism of some kind going on, which Rupert does. But can the deal get past the FCC?

[drellberg]

Investors clearly think some sort of deal will happen. Otherwise the stock price wouldn’t be so close to Murdoch’s offer price. This suggests that the board and the family will look for a white knight. The white knight would have to come in at a higher price to justify taking their bid over Murdoch’s. I’m not saying that this is the likely outcome. But it is as likely as any scenario.