Wall Street Journal parent’s shares up 15% on anticipation of sale
Investors bet Friday that the Wall Street Journal would not only be sold, but also fetch a higher price than what’s on the table.
Stock in Dow Jones & Co., owner of the Journal and other financial media, jumped $7.89 to $61.20, the highest price in more than five years. The Bancroft family that controls the media company has rejected a bid of $60 a share, or $5 billion, from Rupert Murdoch’s News Corp.
The 15% jump in the stock price follows the news that the Bancroft family is open to other offers and plans to meet with Murdoch to discuss how he might safeguard Dow Jones’ journalistic integrity.
Late Friday, the Journal’s website reported that the meeting was scheduled for Monday. The family has been debating who would represent its interests at the meeting and who would represent the outside members of the Dow Jones board.
The Bancrofts have controlled the preeminent business publication for 105 years. Some investors held out hope that another bidder would emerge.
But bankers who have been tracking the process are skeptical that will happen. News Corp.’s bid was more than 60% above where Dow Jones stock had been trading. Instead, shareholders and analysts concluded that Dow Jones would reach a deal with Murdoch.
“It’s really hard to see it going in any way except for News Corp.,” said Leo Hindery Jr., managing partner at private equity firm InterMedia Partners. “People have speculated in the last 24 hours as to who might be an alternative, but none of those strike me as credible.”
Hindery was among those predicting that Murdoch would have to make some gesture toward editorial integrity and raise his bid to split off enough of the Bancrofts to cinch the deal.
“Rupert has played it brilliantly. I think he is clearly and deservedly going to be the winner here,” said Hindery, who partnered with Murdoch in the past. “When he decides he wants an asset, he’s very aggressive.”
The main labor union for Dow Jones employees said it remained opposed to Murdoch’s bid, as did Jim Ottaway Jr., a former executive at the company whose family has more than 5% of the voting power.
The Bancrofts together control 64% of the vote at Dow Jones, but a poll of the clan found those controlling just 52% of the total vote opposed Murdoch’s bid at the outset.
Beside the Ottaways and the Bancrofts, most Dow Jones shares are now held by short-term investors who will seek the highest price they can get.
