Dow Jones board formally rejects News Corp's takeover bid

by Staff, Brand Republic 03-May-07, 09:35

NEW YORK - The Dow Jones board of directors has announced it will take no action with respect to News Corporation's $5bn (£2.5bn) bid to acquire Dow Jones & Co., publisher of The Wall Street Journal.

On Tuesday, the Bancroft family, which owns 62% of the company's voting stock, stated that it would vote shares constituting slightly more than 50% of the outstanding voting power of Dow Jones against the proposal.

The board met yesterday to consider the bid, but said that because overall voting power favoured rejection of the offer, the company would take no action with respect to the proposal.

The decision could create tension between the Bancroft family and Dow Jones's board of directors and other shareholders, who are reportedly eager to sell the company.

Legal experts claim that if no new proposals were put forward and the stock subsequently slumped, minority shareholders could have grounds for legal action.

Dow Jones stock closed yesterday at $56 a share, down 20 cents from Tuesday when the offer was first disclosed.

News Corporation made the unsolicited takeover offer to the Dow Jones board in a letter two weeks ago. The Bancroft's did not know they would be under pressure to express their preference until Tuesday, when CNBC broke the news of the offer.

The family's rejection is sure to upset Dow Jones's non-family shareholders who traded into the stock in the last 48 hours in expectation of the sale.