Dow Jones Accepts News Corp. Offer

Late Tuesday afternoon News Corp.'s board agreed to proceed with its $5 billion buyout of Dow Jones, after earlier in the day Bancroft family members owning over 37% of the controlling vote signed off on the offer. A key family trust that had been holding out backed down, shifting 6% of its 9.1% voting stake in support of the deal. Family members controlling 37.4% of the vote now favor the move, more than half of its 64.2% voting stake. Added to the 23% of public shareholders' 29% vote expected to support the bid, it leaves News Corp. with a compfortable 60% majority. Possible snags include public shareholders holding out for more money, and the need for regulatory approval. Assuming the deal is approved, it could close by year-end. The Bancrofts wrangled over whether to accept Rupert Murdoch's News Corp.'s $60-per-share offer. A sore point was concern over the Wall Street Journal's editorial independence in the face of Murdoch ownership. Some family members who originally opposed the deal appear to have been swayed after they realized they would be left on the hook for $30 million in advisor fees if they voted the deal down. News Corp. will now assume the fees when it takes control, providing the Bancrofts a modest deal-sweetener of $1.31/share (3%). "After all the high-minded concerns about editorial interest and journalistic excellence, it gets down to who pays the legal fees for the Bancrofts," Benchmark & Co. analyst Ed Atorino said. "So much for principles." Dow Jones shares closed up 11.3% at $57.38. News Corp. shares fell 0.8% to $22.66.

Sources: Press release, Reuters, CNBC, New York Times, Wall Street Journal
Commentary: Murdoch Might Have Enough Bancroft Votes to Clinch • Bancrofts Continue to Wrangle on Murdoch Bid
Stocks/ETFs to watch: DJ, NWS. Competitors: NYT, RTRSY, TOC, GE
Earnings call transcript: Dow Jones Q2 2007, News Corporation F3Q07
Related: How They Voted [WSJ] • Publisher's Letter: A Report to Our Readers [WSJ] • Reactions to the deal [WSJ]

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