Murdoch clinches £2.8bn Dow Jones takeover
LONDON - Rupert Murdoch's News Corporation has finally succeeded in its $5.6bn (£2.8bn) takeover bid of Dow Jones & Co, publisher of The Wall Street Journal, after key members of the controlling Bancroft family switched sides to back the sale.
The outcome of the vote is now largely assured after last-minute negotiations resulted in Bancroft family members and trusts, representing 37% of Dow Jones stock, voting in favour of the deal. This represents more than half of the family's 64% voting block.
Together with the minority public shareholders, who are expected to overwhelmingly back the $60-a-share bid, Murdoch now has a comfortable margin to ensure the deal is approved.
News Corp has agreed to establish a five-member, special committee with the objective of assuring the continued journalistic and editorial integrity and independence of Dow Jones' publications and services.
When the merger is finalised, News Corp will also appoint a member of the Bancroft family or another mutually acceptable person to the News Corporation board of directors.
Rupert Murdoch, chairman and chief executive officer of News Corporation, said, "I am deeply gratified at the level of support we have received from the Bancroft family and its trustees. Given the Bancrofts' long and distinguished history as custodians of Dow Jones, we appreciate how difficult this decision was for some family members. I want to offer the Bancrofts my thanks, and an assurance that our company and my family will be equally strong custodians."
Murdoch plans to invest in The Wall Street Journal's Washington bureau and digital operations and expand its domestic readership. He has also said he would expand the Journal's presence overseas, competing against titles such as Pearson's Financial Times.
He is expected to launch a business-themed cable news channel in the US later this year to rival General Electric's CNBC network and hopes Dow Jones' news resources and brand name help kickstart that channel. Dow Jones has a deal to supply content to CNBC until 2012, which Murdoch is likely to buy out of.
News Corp first made its takeover offer three months ago, which represented a 67% premium above Dow Jones's share price at the time it became public. This was quickly rejected by the Bancrofts in early May but they subsequently reconsidered and have been wrangling over the decision ever since.
The family, which has controlled Dow Jones since 1902, has been divided because some members felt the quality and independence of the Journal would suffer if Murdoch took over.
According to the Journal, opponents included family member Leslie Hill, who resigned as Dow Jones director late yesterday when the deal neared completion, as well as German publishing executive Dieter von Holtzbrinck, a Dow Jones director who resigned two weeks ago in protest.
But Elisabeth Goth Chelberg, a Bancroft in favour of the deal, said: "On the one hand it is quite sad, but on the other it was the only reasonable thing to do. Now I look forward to a better Dow Jones.
"It's going to have more money and a world presence and all of the things that it could have and should have but didn't."
Once the sale is complete, Dow Jones will become part of Murdoch's global media conglomerate, which includes Twentieth Century Fox, Fox News channel, MySpace, satellite TV broadcasters and newspapers in Australia and the United Kingdom, as well as the New York Post.
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