Rupert Murdoch's News Corp., moving to regain full control of its majority-owned Fox television properties, is offering to buy the remaining publicly held shares of Fox Entertainment...
NEW YORK — Rupert Murdoch’s News Corp., moving to regain full control of its majority-owned Fox television properties, is offering to buy the remaining publicly held shares of Fox Entertainment Group in a $5.9 billion stock deal.
Fox shares surged nearly 10 percent, topping the value of Murdoch’s offer and suggesting that investors expect to be paid more.
The exchange offer announced yesterday would solidify Murdoch’s control over Fox assets that include the Fox broadcast network as well as Fox news and sports channels, the Twentieth Century Fox movie studio and a controlling interest in satellite-television giant DirecTV.
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Under the deal announced yesterday, News Corp. would offer to exchange 1.9 shares of News Corp. stock for each outstanding Fox Class A share it doesn’t already own.
News Corp. owns 82.1 percent of the equity and 97 percent of the voting power of Fox Entertainment. It owns 59.1 percent of the outstanding Fox Class A common stock and all of the Fox Class B common stock.
In trading yesterday, Fox Entertainment shares rose $3.06, or 9.8 percent, to $34.28 — a 52-week high. News Corp. shares slipped 38 cents, or 2.1 percent, to $17.85.
Based on Friday’s closing price of $31.22 per class A share, the company said the exchange offer represented a premium of about 7.4 percent for the Fox Class A shares — or about $33.53 per share for a total of nearly $5.9 billion.
Based on yesterday’s closing prices, however, those Fox shares are now worth just under $6 billion.
Analysts were mixed about whether the News Corp. offer was adequate.
“We disagree … that the offer constitutes a fair and full price,” Equity Group analyst Katherine Styponias said in a research note. “A price closer to $37 is what they should hold out for.”
Styponias also downgraded Fox shares from overweight to neutral, citing the limited upside because of the News Corp. offer.
In another research report, Oppenheimer acknowledged the News Corp. offer “may seem small, but the transaction is not a necessity for NWS, and changes virtually nothing operationally. We see little likelihood for NWS increasing its offer.”
A News Corp. buyout of Fox had been expected after the November decision by News Corp., which also owns newspaper, book-publishing, television and satellite-TV assets around the world, to move its base to the United States from Australia.
At the time, News Corp. said the relocation would help expand the company’s base of shareholders, because some institutional shareholders were limited in how much stock they could own in foreign-listed companies.
Analysts also said it would make it easier for News Corp. to make U.S. acquisitions; previously, News Corp. had to rely on Fox stock for leverage in deal making.
“Given the News reincorporation in the U.S., we saw little reason for Fox to continue as a separate carved out entity and as such believed that the takeout was likely,” Styponias, the Prudential analyst, said in her note.