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News Corp. Offers $5.86 Bln to Buy Out Fox Holders (Update6) Listen
Jan. 10 (Bloomberg) -- Rupert Murdoch's News Corp. offered to buy out minority holders of Fox Entertainment Group Inc. for $5.86 billion to solidify control over his largest U.S. asset.
News Corp., which owns 82 percent of Fox, said in a statement today that it plans to offer 1.9 Class A shares for each Fox Class A share. That values Fox at about $33.54 a share, or 7.4 percent more than their closing price on Jan. 7.
Murdoch has boosted News Corp.'s U.S. presence by moving its headquarters to New York from Sydney in November and getting the company's stock added to the Standard & Poor's 500 Index. Murdoch said in October he would consider buying full ownership of Fox, which produces about 75 percent of News Corp.'s revenue. Fox's assets include the Fox News Channel and 20th Century Fox studio.
``It's a cleaner investment scenario for investors, a little easier to understand,'' said David Joyce, a JB Hanauer & Co. analyst in Hallandale, Florida. He rates both stocks ``market perform'' and doesn't own either. ``It takes a layer of complexity away.''
Fox shares rose $2.70, or 8.7 percent, to $33.92 at 1:20 p.m. in New York Stock Exchange composite trading. They've increased 7.8 percent in the past year through Jan. 7. News Corp. Class A shares fell 59 cents to $17.06 and had dropped 15 percent in the past year through Jan. 7.
``It's not a lowball offer, but it's also not extremely generous,'' Joyce said. ``It's possible that some other outside interest could come in and try to have it forced up, but it's not probable.''
Logic Gone
Having shares of Fox trade separately provided a means for U.S. investors not permitted to own foreign stocks to buy into the company, Chief Financial Officer David Devoe said today on a conference call.
``Since the reincorporation of News Corp. in the U.S., the logic for Fox no longer exists,'' he said. ``We really took Fox public as a way to drive value into the stock.''
The combination will save $3 million to $7 million in costs such as legal and auditing expenses, Devoe said.
Fox Entertainment also owns the Fox broadcast TV network and station group and a 34 percent interest in DirecTV Group Inc., the largest U.S. satellite-television provider.
Fox generated net income of $1.4 billion, or $1.44 a share, on sales of $12.2 billion in the year ended June 30. News Corp. reported net income of $1.6 billion, or $1.17 a share, on $21 billion in revenue, including its share of Fox.
Fox Management
Management of the Fox assets is the responsibility of Peter Chernin, president and chief operating officer of both Fox and News Corp.
Murdoch has been giving more power to his sons, Lachlan, 33, and James, 32. Lachlan is deputy chief operating officer of News Corp., with responsibility for the New York Post newspaper and Fox- owned television stations. James is chief executive of British Sky Broadcasting Group Plc, the U.K.-based satellite television service that News Corp. controls through a 35 percent stake.
The purchase leaves some questions unanswered. John Malone's Liberty Media Corp. in December boosted its ownership of News Corp. voting shares to 18 percent by exercising an option to swap non- voting stock for voting shares. The transaction will be completed by mid-January, Liberty said then.
Murdoch's family owns 29.5 percent of the voting shares. News Corp. on Nov. 8 adopted a plan to protect against a hostile bid. Malone said Nov. 12 that his plan to acquire more voting shares was ``entirely friendly'' and that he supports Murdoch.
News Corp. spokesman Andrew Butcher declined to comment on Malone. There is no ``direct impact'' on Malone from this transaction, Joyce said.
``What he's trying to do is still open to speculation,'' Joyce said.
To contact the reporter on this story:
Michael White in Los Angeles at mwhite8@bloomberg.net; Ron Day in Princeton at rday1@bloomberg.net.
To contact the editor responsible for this story:
Cesca Antonelli at fantonelli@bloomberg.net.
News Corp. Offers $5.86 Bln to Buy Out Fox Holders (Update6) Listen
Jan. 10 (Bloomberg) -- Rupert Murdoch's News Corp. offered to buy out minority holders of Fox Entertainment Group Inc. for $5.86 billion to solidify control over his largest U.S. asset.
News Corp., which owns 82 percent of Fox, said in a statement today that it plans to offer 1.9 Class A shares for each Fox Class A share. That values Fox at about $33.54 a share, or 7.4 percent more than their closing price on Jan. 7.
Murdoch has boosted News Corp.'s U.S. presence by moving its headquarters to New York from Sydney in November and getting the company's stock added to the Standard & Poor's 500 Index. Murdoch said in October he would consider buying full ownership of Fox, which produces about 75 percent of News Corp.'s revenue. Fox's assets include the Fox News Channel and 20th Century Fox studio.
``It's a cleaner investment scenario for investors, a little easier to understand,'' said David Joyce, a JB Hanauer & Co. analyst in Hallandale, Florida. He rates both stocks ``market perform'' and doesn't own either. ``It takes a layer of complexity away.''
Fox shares rose $2.70, or 8.7 percent, to $33.92 at 1:20 p.m. in New York Stock Exchange composite trading. They've increased 7.8 percent in the past year through Jan. 7. News Corp. Class A shares fell 59 cents to $17.06 and had dropped 15 percent in the past year through Jan. 7.
``It's not a lowball offer, but it's also not extremely generous,'' Joyce said. ``It's possible that some other outside interest could come in and try to have it forced up, but it's not probable.''
Logic Gone
Having shares of Fox trade separately provided a means for U.S. investors not permitted to own foreign stocks to buy into the company, Chief Financial Officer David Devoe said today on a conference call.
``Since the reincorporation of News Corp. in the U.S., the logic for Fox no longer exists,'' he said. ``We really took Fox public as a way to drive value into the stock.''
The combination will save $3 million to $7 million in costs such as legal and auditing expenses, Devoe said.
Fox Entertainment also owns the Fox broadcast TV network and station group and a 34 percent interest in DirecTV Group Inc., the largest U.S. satellite-television provider.
Fox generated net income of $1.4 billion, or $1.44 a share, on sales of $12.2 billion in the year ended June 30. News Corp. reported net income of $1.6 billion, or $1.17 a share, on $21 billion in revenue, including its share of Fox.
Fox Management
Management of the Fox assets is the responsibility of Peter Chernin, president and chief operating officer of both Fox and News Corp.
Murdoch has been giving more power to his sons, Lachlan, 33, and James, 32. Lachlan is deputy chief operating officer of News Corp., with responsibility for the New York Post newspaper and Fox- owned television stations. James is chief executive of British Sky Broadcasting Group Plc, the U.K.-based satellite television service that News Corp. controls through a 35 percent stake.
The purchase leaves some questions unanswered. John Malone's Liberty Media Corp. in December boosted its ownership of News Corp. voting shares to 18 percent by exercising an option to swap non- voting stock for voting shares. The transaction will be completed by mid-January, Liberty said then.
Murdoch's family owns 29.5 percent of the voting shares. News Corp. on Nov. 8 adopted a plan to protect against a hostile bid. Malone said Nov. 12 that his plan to acquire more voting shares was ``entirely friendly'' and that he supports Murdoch.
News Corp. spokesman Andrew Butcher declined to comment on Malone. There is no ``direct impact'' on Malone from this transaction, Joyce said.
``What he's trying to do is still open to speculation,'' Joyce said.
To contact the reporter on this story:
Michael White in Los Angeles at mwhite8@bloomberg.net; Ron Day in Princeton at rday1@bloomberg.net.
To contact the editor responsible for this story:
Cesca Antonelli at fantonelli@bloomberg.net.
