21st Century Fox Shareholders OK Australia Stock Delisting

7:16 AM PST 03/21/2014 by Georg Szalai
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21st Century Fox chairman and CEO Rupert Murdoch

UPDATED: Chairman and CEO Rupert Murdoch calls the move "a further step in the evolution" of the entertainment conglomerate, which now only gets 2 percent of its revenue from the mogul's motherland.

Shareholders of Rupert Murdoch's 21st Century Fox on Friday approved a proposed delisting of the entertainment conglomerate's stock in Australia during a special shareholder meeting in New York.

‎The short meeting was mostly seen as a technicality given that the Murdoch family controls a big voting stake of more than 39 percent. But the proposed delisting was also a controversial matter for some, including a prominent shareholder advisory firm.

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Fox is expected to submit the proposal on Monday to the Australian Securities Exchange for approval, which should come that same day. The target date for the delisting is May 8.

The delisting will further reduce Fox's ties with Murdoch's native Australia, where he first started building his media empire. Murdoch has U.S. citizenship.

The focus on Fox's U.S. ‎stock listing will somewhat reduce corporate costs and administrative work for the company and should provide improved liquidity in the stock on the Nasdaq, according to the firm.

"The initial listing on the ASX reflected that the parent company of the group was domiciled in Australia, and the company's assets and business at that time were located in Australia," Fox said in its delisting proposal. "In 2004, the group was re-domiciled in Delaware upon the affirmative vote of its stockholders."

Last June, the conglomerate, then known as News Corp., separated its publishing and entertainment businesses into two separate independent publicly traded companies, News Corp and 21st Century Fox. "Following the separation, the [latter] retained only limited operations in Australia," the delisting proposal said.

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However, proxy advisory service ISS has opposed the delisting, arguing that it is hard to prove that the suggested benefits outweigh the costs. With the effect on the conglomerate's market valuation unknown, the costs of forcing certain Australian investors to sell their holdings must be weighed against reduced listed and legal costs, estimated at about $2 million, it argued.

Some critics have also criticized that the delisting would end certain additional governance and disclosure requirements in Australia. For example, Fox will no longer be required to file daily reports on stock buybacks. The U.S. requires only quarterly disclosures on share repurchases.

The ASX also requires stockholder approval for the issuance of stock to directors. Plus, it requires the company to disclose in its annual report the extent to which it has followed recommendations set by the ASX Corporate Governance Council. Fox has argued that it "currently maintains, and will continue to maintain, robust and thorough corporate governance practices."

Highlighted Murdoch on Friday: "The company would, however, still be subject to comprehensive regulation under the U.S. securities laws and the Nasdaq listing rules, which are similar to the ASX listing rules and corporate governance recommendations."

The Fox-News Corp separation was approved about a year ago, and Friday's vote was designed to mark "a further step in the evolution" of the company, Murdoch said at the special meeting. "There are fewer than 10 percent of the company's outstanding shares trading" in Australia, he argued. Less than 2 percent of revenue and less than 1 percent of assets and staff is not based in Australia, the mogul added.

Murdoch said at the meeting the preliminary voting showed a majority vote in favor of the delisting, with the company later confirming the approval in a statement. Final voting results are set to be announced later in the day.

After little more than 10 minutes of administrative business and brief remarks from Murdoch followed by one shareholder comment, the Friday meeting wrapped up.

Email: Georg.Szalai@THR.com
Twitter: @georgszalai

 

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