Murdoch’s bid still lacks family’s OK
Media baron Rupert Murdoch did not win the support of a solid majority of the family that controls the Wall Street Journal by a Monday deadline, casting doubt on the prospects for his $5-billion takeover bid.
More than five hours after the 2 p.m. EST deadline for members of the Bancroft family to tell their lawyers how they were voting, their Boston firm still hadn’t issued a statement. Instead, the Journal reported the lawyers were still haggling with holdouts who were angling for a higher price than the $60 a share Murdoch’s News Corp. offered in April for Journal parent Dow Jones & Co.
Doubts about a successful acquisition mounted through the day, especially after people involved in the process put the level of support from various Bancroft family trusts at about 28% of total voting power. All told, the family controls 64% of the power in Dow Jones through super-voting Class B shares.
A 28% tally should be enough to win eventual approval of the deal, because the 30% of the vote held by regular Class A investors is expected to back the Murdoch bid, which added a dramatic premium to the previous going rate for Dow Jones stock.
But a News Corp. spokesman said it was “highly unlikely” that Murdoch would proceed without more family support because small Class A investors often don’t bother to vote in such referendums, leading to an expensive and nasty fight.
Several people involved in the struggle for Class B votes said they believed News Corp.'s comments were aimed at a few trustees that control more than 9% of voting power. Those lawyers had indicated in recent days they would vote against Murdoch because they wanted more money for the stock.
If the Bancroft holdouts can be convinced that Murdoch would sooner walk away than raise the bid, they might change their minds before a News Corp. board meeting scheduled for today, where directors are expected to discuss the next step.
The uncertainty put pressure on Dow Jones shares, which fell $2.89 Monday, or more than 5%, to close at $51.56.
Few were shocked that the Bancrofts had failed again to come together on a decision.
“I’d be very surprised if they behaved any differently from how they have all along -- confused and tardy,” an advisor said to another party in the fray.
When Murdoch expressed interest in buying Dow Jones, the family immediately came out against a sale, just as its members had rejected all comers for more than a century.
But that proved to be the first of a series of half-steps and retreats that left Murdoch exasperated.
“They keep changing their minds,” he complained in one interview.
Some in the family switched sides more than once.
William Cox Jr., a key member of the purse-string-holding fourth generation, opposed a sale, then supported it.
Leslie Hill, a retired airline pilot and a Dow Jones director, was initially supportive, then emerged as one of the strongest opposing voices.
After Murdoch put an offer in writing that leaked to the media, a poll of the family members by the most powerful of many trustees for their investments, Bostonian Michael Elefante, found that 52% of the voting power in Dow Jones was against a transaction with News Corp.
But that meant Murdoch had only to peel off a few of the family holdouts to get his way.
The Bancrofts first tried to get together on a set of rules intended to keep Murdoch from interfering in the news pages of the Journal -- a major concern for Dow Jones employees and a chief reason that some Bancrofts are fighting the deal.
But they couldn’t get nearly unanimous support for the initiative and asked the Dow Jones board to negotiate instead.
The board struck a deal that included editorial safeguards, and the entire matter went back to the Bancrofts last week.
Their decision-making was made more complex by the web of more than 40 trusts that control the family’s shares.
Some of those trusts’ leaders must vote unanimously to take action, while others need not. Some trustees are required to vote in the best financial interest of their beneficiaries, but others are not bound by such a rule.
As the pressure intensified in recent days, family members who were opposed to a sale but controlled assets on behalf of children or other relatives who wanted to sell were asked to step down.
The possibility of lawsuits was in the air.
At least one agreed, but not Christopher Bancroft, who has authority over a 15% bloc.