U.S. News

CNBC's Faber: Why the Bancrofts Changed Their Tune

David Faber

Three months after CNBC first broke the news that News Corp.  was offering $60 a share to buy Dow Jones, enough of the company's controlling shareholders have now voted in favor of the deal, making it a reality.

These last three months have been a story worthy of the Wall Street Journal's pages, where it has often wound up, and the last 24 hours have been no exception.

In that time two key blocks of Bancroft votes went News Corp.'s way, making it highly likely that News Corp. will win the needed 50.1% of shareholder votes cast.

In the last day, the Boston-based branch of the Bancrofts decided to vote in favor of the deal after indicating that--along with the Denver branch--it wanted to get paid $66 a share, with the remainder of common shareholders getting $58.

When the Denver branch realized it would be alone in asking for such terms, it chose to fold as well, bringing the necessary votes to News Corp.'s side, accoridng to people close to the Denver branch.

The payment of fees was also a key issue. Upon learning that Merrill Lynch's fee for advising the Bancrofts would be paid by News Corp, family members made it clear that News Corp.'s willingness to reimburse other fees incurred by the trusts would be helpful in getting their votes.

News Corp. will now pay almost all the fees in question, though it was unclear whether the $10 million fee of the law firm Wachtell Lipton will be included. Wachtell and its lead partner Marty Lipton were key advisors to the Bancrofts.

While News. Corp's bid was incredibly generous from the moment it was made, it is a rarity for an unsolicited bid to not be raised even a little by the time the seller agrees to terms.

One key strategic decision: a May 31 press release in which the family admitted Dow Jones's mission might be better accomplished by being part of another company.

And as in virtually any high profile deal, potential conflicts are everywhere.

Merrill Lynch is advising the Bancrofts, but is also currently working on selling some TV stations for News Corp., which will also be paying its fee for advising the Bancrofts. That, however, is typical of such deals.

Goldman Sachs advised Dow Jones, but has long had the key investment banking relationship with News. Corp.

Conflcits or bad advice aside, News Corp. is paying an awful lot of money. And in a few hours, Murdoch's long quest to own the Wall Street Journal will be realized.