New York: Just hours before the Bancroft family, the controlling shareholders of Wall Street Journal publisher Dow Jones’ and Co., are to decide how many of them support the $5 billion offer by Rupert Murdoch, a News Corp. spokesperson said the media conglomerate is “highly unlikely” to proceed with the deal if support remains at its currently reported levels.
“If the votes were to remain at present reported levels, it is highly unlikely that we would proceed the offer,” a News Corp. spokesperson told AFP.
Dow Jones’ shares have been wobbly in recent weeks, trading below Murdoch’s offering price of $60 reflecting the risk that the deal may not go through. They took another tumble on 31 July 2007 after the Journal posted its story, and were down $2.09, or 3.8% at $52.36 in afternoon trading, having dipped as low as $49.49, a drop of 9% , earlier in the day.
The Bancrofts collectively control 64% of the shareholder vote of Dow Jones through a special class of stock, but only about half of them need to support the deal for it to succeed. The Bancrofts are a diverse clan and their voting interest in the company is held through a complex series of privately held trusts, making the outcome difficult to predict.
Many of Dow Jones’ public shareholders are expected to support the deal, which represents a rich premium of about 65% over Dow Jones’ mid-$30s share price prior to the offer becoming public in early May.
As of late Sunday, some 28% of the Bancrofts supported the deal, the Journal reported on 31 July, but a News Corp. spokesman told the paper that the company was “highly unlikely” to proceed with the deal at that level of support. A News Corp. spokesman confirmed the remarks.
The spokesman asked not to be named due to the sensitive nature of the discussions. A Bancroft family spokesman declined to comment.
The Bancroft family, which has controlled Dow Jones for more than a century, has been deeply divided over whether to sell to Murdoch, largely over concerns that his hands-on management style could affect the papers’ coverage.
In the interest of avoiding a messy showdown later, News Corp. has said it would proceed with the deal to buy Dow Jones only if it secures sufficient support from the Bancroft family, though it hasn’t specified what that level would be.
Dow Jones’ board has tentatively approved the deal, and the final decision now rests with the Bancrofts. Besides several Bancroft family members, including Dow Jones director Christopher Bancroft, Murdoch’s bid is also being opposed by former board member Jim Ottaway Jr, whose family controls 7% of the shareholder vote.