Rupert Murdoch dismisses proposal to combine Fox, News Corp, contemplates sale of Move

Rupert Murdoch dismisses proposal to combine Fox, News Corp, contemplates sale of Move

Jan 24 (Reuters) – Rupert Murdoch on Tuesday withdrew a proposal to reunite News Corp (NWSA.O) and Fox Corp, as the company is also exploring the sale of Move Inc, which operates website Realtor.com, to CoStar Group, according to a regulatory filing and sources familiar with the process.

Three sources familiar with the matter said News Corp was in talks to sell its stake in Move to CoStar for about $3 billion.

Several major shareholders had publicly said they were opposed to the proposed Fox-News Corp combination, and News Corp said in a statement Tuesday that it was “not optimal for both News Corp and Fox shareholders at this time.”

The deal would have recombined the media empire that Murdoch divided nearly a decade ago.

News Corp confirmed talks to sell Move to CoStar after Reuters reported it on Tuesday, adding that there is no guarantee the talks will lead to a transaction.

A CoStar spokesperson said the company “continually evaluates M&A opportunities across a wide range of companies to maximize shareholder value” and does not comment on “rumor or market speculation.”

No offers were exchanged between News Corp and Fox Corp before merger deliberations were dropped, according to sources familiar with the process, who said pushback from News Corp shareholders played a role in scrapping those plans.

A rally in News Corp shares in recent weeks meant Fox would have had to pay a significant premium to get the merger agreed, something the Murdochs didn’t think they could justify to shareholders, people familiar with the matter said.

MARKET VALUE

While Fox shares are down 5%, News Corp shares are up 25% since talks between the two companies were first announced on October 14. $17 billion.

Tennis – US Open – Mens Final – New York, US – September 10, 2017 – Rupert Murdoch, president of Fox News Channel, stands before Rafael Nadal of Spain plays against Kevin Anderson of South Africa. REUTERS/Mike Segar/File Photo

Murdoch proposed reuniting his media empire last fall, arguing that together the publishing and entertainment companies he spun off in 2013 would give the combined company greater scale in news, live sports and information, the sources said.

Several people close to the Murdochs saw the attempt to combine the media companies as prompted by Murdoch’s 91-year-old succession planning to consolidate power behind his son and Fox head Lachlan Murdoch, a notion that the company described as “absurd” in November.

Some of News Corp’s major shareholders, including Independent Franchise Partners and T. Rowe Price, opposed the idea.

Rupert Murdoch and his family control about 40% of News Corp and Fox in trust. Had a deal been reached, they would have abstained from voting their shares when each company sought shareholder approval for the merger, due to potential conflict of interests. This made securing the backing of other major shareholders a prerequisite for the deal to go through.

‘RIGHT DECISION’

Activist investment firm Irenic Capital, which was among the first to say the proposed meeting would likely underestimate News Corp, on Tuesday applauded the decision not to go ahead.

“This is the right decision,” said Irenic’s chief investment officer, Adam Katz. “Looking forward, News Corp has the opportunity to create substantial value for its owners.”

News Corp agreed to buy Move in 2014 for $950 million to diversify its digital real estate business, which was, at the time, primarily in Australia.

Since then, News Corp investors had called on the company to spin off its digital real estate assets. Irenic also publicly urged News Corp to sell its Dow Jones media holdings.

In a slideshow in November, Irenic estimated that News Corp’s 80% stake in Move was worth $1.4 billion at $2.47 per share.

In a letter to News Corp employees on Tuesday, News Corp Chief Executive Robert Thomson said: “In my October memo, I said the Special Committee’s assessment would have no impact on our current operations; that was the case. and it continues to be so following today’s announcement.”

Reporting by Dawn Chmielewski in Los Angeles, Svea Herbst-Bayliss, Greg Roumeliotis, Anirban Sen and Helen Coster in New York; Additional reporting by Deborah Sophia in Bengaluru; Edited by Bill Berkrot and Grant McCool

Our standards: Thomson Reuters Trust Principles.

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