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There is nothing like a 65 per cent premium to get even the most reluctant seller’s attention. Rupert Murdoch’s bombshell bid certainly has the Bancroft family listening. So what will happen next in his campaign to win control of Dow Jones and its flagship Wall Street Journal title?
His main weapon is the fragmented ownership of the super-voting shares that control Dow Jones’s fate. That is very different from the New York Times Company where most of the controlling shares are held in a coherent family trust. In that case, the family trustees would effectively have to agree as a unit to any deal – so Times investors should not hold their breath for an unsolicited offer.
With Dow Jones, however, Mr Murdoch can try convincing individual Bancroft shareholders (with a combined economic interest of 24.7 per cent and voting interest of 64.2 per cent) to sell. He has made progress. Currently, family members “representing slightly more than 50 per cent of the voting power of Dow Jones” would vote against News Corporation’s $60 a share bid.
Admittedly, the family can still block a bid with less than 50 per cent of the outstanding votes simply because it is impossible to get all shareholders to vote. And Bancrofts opposed to the deal can always buy out other family members. But Mr Murdoch probably has to convince just a few big Bancroft holders to win.
It is unlikely that he will try offering different terms for the super-voting shares over the ordinary shares. (There are precedents, but it would cause a huge outcry). Instead it comes down to the price and persuading the family he is a palatable owner. Mr Murdoch can try making pledges on editorial standards. But enough money might end up being sufficient to soothe concerns. On that score, Mr Murdoch’s opening bid suggests that he is willing to pay what it takes.