And so, it looks to be a done deal.
News Corp. Is Poised to Win Dow Jones
As Bancrofts Agree
To $5 Billion Buyout
Paying Fees Cinches Deal
By SARAH ELLISON and MATTHEW KARNITSCHNIG
August 1, 2007
A century of Bancroft-family ownership at Dow Jones & Co. is over.
Rupert Murdoch’s News Corp. sealed a $5 billion agreement to purchase the publisher of The Wall Street Journal after three months of drama in the controlling family and public debate about journalistic values.
All it took to nudge the matter across the finish line was agreement to allow the company to pay $30 million in fees for the Bancrofts’ advisors? Small beer, really, at least to Dow Jones & News Corp, though such a number would not be small to me, personally.
It was $30 million largely wasted, in retrospect, though the Bancrofts surely didn’t spend it knowing that it would be so. The deal approved today by both companies’ boards is functionally identical to the one initially offered.
And the $30 million didn’t buy guarantees of editorial independence or the continued absurdly high quality of the Wall Street Journal family of publications, either. My argument all along has been that Murdoch has no plans to tarnish the stellar reputation of the Journal, and I don’t expect to be proven wrong about that in the future. So the fee payment agreement really ends up being a sop to the Bancrofts, and apparently one final preference tendered to them that’s not available to the lowly holders of A shares. I doubt that the A holders will complain, and I’ve got no basis to do so, so good for the Bancrofts, happy trails, and all the rest.
And speaking of predictions, I, certainly not alone, have asserted all along that the outcome would likely be just this – Dow Jones selling to News Corp, at the original price. Big deal – predictions are cheap, and this one, particularly given the premium offered and the logic behind it, was the most obvious all along.
Consequence free prediction? True, in my case, which makes such predictions even cheaper. Have a look:
At any point from May 9 thru May 31, and quite notably as recently as yesterday, there was serious money to be made buying the stock on the presumption of a deal being completed.
Did I? No.
Do I wish I had? No.
Why? Because if the Bancrofts had somehow mustered the votes to block the deal, this stock would have been back in the 30s in a heartbeat, and that was a risk not sufficiently offset for me by the $9 or $10/share the market was leaving on the table.
Even though the very fact that the results of rejection would be a $1.5 billion haircut in martket value pretty much guaranteed that the deal had to be done. On the flip side, it could cause some minor pain to be among those short 3.8 million shares of DJ as of the report three weeks ago, I’m thinking.
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