The Wall Street Journal
July 31, 2007 4:58 p.m. EDT
News Corp. Appears to Have Enough Votes to Clinch Deal
By MARTIN PEERS and DENNIS BERMAN
July 31, 2007 4:58 p.m.
News Corp. is poised to win control of Dow Jones & Co., including its flagship publication, The Wall Street Journal, after a key Bancroft trust changed its mind and decided to accept News Corp.'s $60-a-share offer for the newspaper publisher. The trust, overseen by a Denver law firm, holds 9.1% of Dow Jones's voting shares and had been holding out for a higher offer from News Corp.
But the media giant refused to raise its price, which was already a 67% premium to where Dow Jones stock was trading before news of the offer became public on May 1. News Corp. had signaled its intention to abandon the offer if the family didn't support the offer. That put pressure on the Denver trust to back down.
Helping persuade the Denver trust to change its mind was a decision by Dow Jones's board to create a fund to cover payments to firms advising Bancroft family members, including Merrill Lynch and the law firms Hemenway & Barnes and Wachtell, Lipton, Rosen & Katz. News Corp. would assume these liabilities if it bought Dow Jones. The fees could total at least $30 million, according to people familiar with the situation.
It is not clear whether the Denver trust will vote its entire 9.1% stake in favor of the deal, however, as its beneficiaries include Christopher Bancroft who is strongly opposed to the deal. But the trust's decision likely increases to at least 38% the amount of voting stock held by the Bancroft family that now supports the News Corp. offer. When added to the nearly 29% stock held by public shareholders, who are expected to vote for the deal in overwhelming numbers, News Corp. should have enough to comfortably win a majority of Dow Jones shares when the deal is put to a vote.
The Bancrofts have 64.2% of the overall votes in Dow Jones.
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I just went through 13 pages of comments and was at least happy to read all the comments saying they will cancel their subscriptions, that while they usually do not agree with the editorial pages, they have been loyal readers of the news section, but will not get into bed with Murdoch, Orally and Geraldo.