Business

Rupert Murdoch withdraws bid to recombine two halves of his empire

Comment

In a major upheaval, Rupert Murdoch and Lachlan Murdoch have decided that the two companies controlled by their family will no longer seek to recombine.

News Corp., which owns the Wall Street Journal, the New York Post and other newspapers, and Fox Corp., which oversees Fox News and Fox Sports, said Tuesday night that the media mogul and his eldest son had concluded that the proposed recombination “is not optimal for shareholders” currently.

Special commissions formed by both companies to evaluate a possible combination have been disbanded. The move came after several shareholders objected to the deal.

Murdoch’s trust owns about 40 percent of the voting shares in both companies, which shared a management structure until a scandal surrounding Murdoch’s London tabloid hacking into the voicemails of public figures prompted the family to separate them a decade ago out of concern that government investigations and civil litigation could threaten their entire empire.

But the companies have a structure that gives certain shareholders – particularly the Murdochs – far more voting power than others, and since the fall they have been exploring a reunion at Rupert Murdoch’s request.

However, any deal would require the approval of a majority of the company’s other investors with voting shares. And dissent lurked even within the Murdoch family: Younger son James, who has relinquished his executive roles in the family business but remains a beneficiary of the family trust, opposed the merger and wrote letters to both boards in the fall raising questions about the deal – a move that is the first published by the New York Times.

The merger talks have also been complicated by interest from an outside company that would like to buy a stake in News Corp. of $3 billion in digital real estate business Move, according to a person familiar with the discussions. Jim Kennedy, a spokesman for News Corp., declined to comment.

At the time of the split in 2013, the senior Murdoch promised it would “enable each company and its division to realize their full potential — and unlock even greater long-term shareholder value.” As recently as 2019, Lachlan Murdoch told Fox investors that the family had no plans to combine the companies. But his father raised the possibility last fall with his older son and various advisers, according to people who spoke to him and who spoke to The Washington Post on condition of anonymity to discuss private conversations.

In November, Irenic Capital Management, an activist investor, sent a letter to News Corp.’s special committee opposing the merger. T. Rowe Price, a major shareholder of News Corp., told the New York Times that the proposed recombination would dilute the value of the company, which was already trading below what it was worth.

On Tuesday evening, Irenitz said he reviewed the letter from the elder Murdoch informing them of the withdrawal of the proposed combination. Adam Katc, co-founder of Irenić, said he was “encouraged” by the move.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button