The board of Dow Jones & Co. Inc. endorsed on Tuesday a $5 billion buyout offer from Rupert Murdoch's News Corp., sending the deal to the controlling Bancroft family for final approval.
The 16 members of the board, which met for several hours in the evening, were not unanimous in their decision but a "strong majority" voted to recommend approving the deal, said one source familiar with the matter.
The board "has determined that it would be prepared to approve, and recommend to the Dow Jones stockholders, including the Bancroft Family stockholders, a merger agreement," Dow Jones said in a statement.
Bancroft family members, who control 64% of Dow Jones's voting shares, are evaluating the offer, the company said. The family is set to meet on Monday, according to The Wall Street Journal, Dow Jones' flagship property.
Two Bancroft board directors - Leslie Hill and Dieter von Holtzbrinck - abstained from the vote, according to the Journal. The third family member on the board, Christopher Bancroft, left the meeting early, it reported, citing unidentified sources.
News Corp. proposed in April to buy all outstanding shares of Dow Jones's common and Class B stock for $60 per share.
Shares in News Corp. rose 1.6% to $28.00 at 0500 GMT in Sydney. Before the news was released, Dow Jones closed down 0.9% at $56.45 and News Corp. ended 2.4% higher at $22.48 in New York.
The rich, 65% premium was welcomed by many shareholders, though a number of Bancrofts opposed the bid because they fear that Murdoch would use the platform provided by Dow Jones's news operations, particularly the Journal, to aid his business interests.
BANCROFTS THINK IT OVER
Dow Jones publishes the Journal, the Barron's investor newspaper and the MarketWatch.com financial news Web site. It also owns Dow Jones Newswires, which competes with Reuters Group Plc and Bloomberg in providing financial news.
Christopher Bancroft, who has been seeking to buy up Dow Jones Class B "super-voting" shares in a bid to block a sale to Murdoch, did not return a telephone call seeking comment. News Corp. and Dow Jones declined to say how board members voted.
The possibility remains that enough members of the Bancroft family and other Class B shareholders could block a sale. Analysts have said that could cause the Dow Jones's stock price to plummet and possibly spur a round of lawsuits by outside shareholders.
Legal experts have said, however, that legal action against the Bancrofts - including those who are members of Dow Jones's board - would likely not succeed.
Internet entrepreneur Brad Greenspan, who offered to buy a 25% stake in Dow Jones at $60 per share, said before Dow Jones released its statement late on Tuesday that he remained "engaged in the process".
He was not immediately reachable for further comment.
The deal that Dow Jones is prepared to recommend would allow a limited number of Dow Jones stockholders the choice of receiving shares in a News Corp. subsidiary that would hold Dow Jones. This would ease the tax impact on shareholders who could participate.
The shares would be exchangeable for shares of News Corp.'s Class A common stock.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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