WSJ: News Corp. Deal for Dow Jones Now Seen Likely

Online version of paper says a key Bancroft family trust has switched positions, and now will sell.
Stephen TaubJuly 31, 2007

The Wall Street Journal online edition reported that News Corp. appears to have enough votes to gain control of the paper’s parent, Dow Jones & Co.

The Journal said that a key Bancroft trust changed its mind and decided to accept News Corp.’s offer of $60 per share, or a total of $5 billion.

The trust holds 9.1 percent of Dow Jones’s voting shares. It had been holding out for a higher price, which News Corp. CEO Rupert Murdoch refused to offer, noting that its price already included a 67-percent premium over the stock price of Dow Jones before news of the offer broke on May 1. Members of the Bancroft family and associated trusts control 64.2 percent of Dow Jones voting shares.

News Corp. seemed to have indicated in recent days that it might prefer to walk away from the deal rather than raise the price tag, or face the possibility that a full vote of shareholders might defeat the deal.

The apparent deal is a warning to all family-controlled companies using dual classes of stock to protect them from being acquired. Such arrangements give “supervoting” rights to one class of stockholder, and a majority control of voting shares. Earlier this year, New York Times Co. worked to fend off Morgan Stanley’s bid to scrap its dual system.

The Journal noted in its online report that a key reason the hold-out Bancroft-family trust changed its mind was a decision by the Dow Jones board to create a fund to cover fees owed to firms advising Bancroft family members, including investment banks and law firms.

These fees could top $30 million, according to the paper, citing people familiar with the situation.