News Corp. Wins Enough Backing To Acquire Dow Jones
The boards of both companies were set to hold separate meetings late Tuesday to ratify a definitive agreement, Faber said.
The accord would end months of wrangling among the Bancroft family, which controls Dow Jones . Many members had opposed the $5 billion offer, which became public on May 1, fearing Murdoch would interfere with the Journal's editorial independence. But monetary issues appeared to have caused many family members to switch their votes.
"They suddenly realized that if they were to turn down this deal, they would also be on the hook for paying all those fees to their advisers," Faber said, including Merrill Lynch and the law firm of Wachtell Lipton. "It adds up to a big number. So they started to change their minds."
Family members decided that if they approved the deal, they could try to get Murdoch to cover the fees, Faber said. And that resulted in a large enough percentage of Bancrofts favoring the deal.
The Boston-based branch of the Bancrofts were the first to switch their vote. That prompted the Denver branch to fold as well, bringing the necessary votes to News Corp.'s side, people close to the Denver branch told Faber.
News Corp. will now pay almost all the fees in question, Faber said, though it was unclear whether the $10 million fee of Wachtell Lipton will be included. Wachtell and its lead partner Marty Lipton were key advisors to the Bancrofts.
Faber also has learned that a Bancroft family member will get a seat on News Corp.'s board. There's also a willingness by News Corp. to offer a small group of Bancrofts preferred News Corp. stock rather than cash to make the deal tax-free, he said.
The Bancrofts collectively control 64% of the shareholder vote of Dow Jones through a special class of stock, but only about half of them need to support the deal for it to succeed. The Bancrofts are a diverse clan and their voting interest in the company is held through a complex series of privately held trusts, making the outcome difficult to predict.
Over the past few weeks investors have been steadily pushing Dow Jones shares below the $60 price that Murdoch has offered, reflecting increasing doubts about the deal going through.
The Bancroft family has been deeply divided over whether to sell to Murdoch, largely over concerns that his management style could affect the papers' coverage.
Murdoch says any concerns about corporate meddling in the Journal's news coverage are unwarranted. News Corp. has agreed to create a committee that would have to sign off on any decision to hire or fire top editors at the paper.
In a lengthy letter to fellow family members last week, Bancroft descendant Crawford Hill urged them to vote for a sale, saying the family hadn't taken an active enough role in overseeing Dow Jones and was now "paying the price for our passivity over the past 25 years."