Murdoch Rival Backed in Australian Takeover

Directors of Herald & Weekly Times Ltd., Australia’s largest media concern, urged stockholders Friday to accept a sweetened, $1.35-billion takeover bid from Australian financier Robert Holmes a Court.

The recommendation was a setback for publisher Rupert Murdoch, whose Sydney, Australia-based News Corp. Ltd. made a rival offer for Herald & Weekly that appeared to be topped by Holmes a Court’s revised proposal.

But Murdoch, after meeting with Herald & Weekly’s board before it considered the new Holmes a Court bid, later told reporters he would not increase his offer “because I already have the best bid.”

Murdoch also said he plans to bypass Herald & Weekly’s directors and take his bid directly to shareholders.

“We are confident that they will welcome the chance to convert their holdings into a much wider, proven and growing worldwide media company,” Murdoch said.

Radio, TV, Newspapers

Herald & Weekly controls two television stations in Melbourne and Adelaide, several radio stations and 15 newspapers; its flagship publication is the Herald in Melbourne.

News Corp. is an international media concern that owns several major newspapers in Australia, the United States and Britain, including the Times of London, New York Post and Boston Herald.

Holmes a Court’s latest offer, announced late Thursday, is equivalent to $9 a share, or $1.35 billion, based on current exchange rates, up from his initial bid of $8.67 a share, or $1.30 billion.

Murdoch had made a cash offer equivalent to $8 a share, or $1.20 billion. But his proposal also included an alternative offer of News Corp. stock, and Murdoch asserted that his proposed share exchange values Herald & Weekly at $9.45 a share, or $1.42 billion.

Position Could Change

Murdoch said the decision by Herald & Weekly’s board to recommend Holmes a Court’s revised bid over News Corp.’s alternative offer of stock “defies logic” because the directors three weeks ago urged shareholders to accept his bid in the absence of a higher one.

Herald & Weekly Chairman John Dahlsen said the board’s recommendation could change “in the event of there being any material and sustainable movement in the share prices of either of the offers, or there being any unacceptable terms and conditions” in the formal takeover documents.

Holmes a Court, meanwhile, also reduced the required number of shares that must be tendered for his offer to proceed to 52% of Herald & Weekly’s 150 million total shares from 90%.