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Rupert Murdoch, News Corp. Sued by Shareholders Over $663 Million Shine Deal

All in the Family
Hussein Samira/SPA Press/Newscom

Amalgamated criticizes “selfish” Murdoch for overpaying daughter Elisabeth, adding “the transaction makes little or no business sense for News Corp.”

 

LONDON -- Rupert Murdoch has been accused of overpaying for his daughter Elisabeth's Shine Group and using News Corp. like "a family candy store" by a group of News Corp. shareholders who want to overturn the $663 million deal.

The shareholders -- the first to challenge last month's takeover agreement which is expected to close March 31 -- said the relationship was "nepotistic" and ignored the interests of News Corp. shareholders.

Amalgamated Bank of New York and the Illinois-based Central Laborors Pension Fund have filed papers at Delaware Chancery Court as part of a legal complaint seeking financial damages and attempting to open the books on how the deal was agreed.

"Although the transaction makes little or no business sense for News Corp. and is far above a price and independent, disinterested third-party would pay for Shine, it is unsurprising that the transaction was approved by the News Corp. board," lawyers for Amalgamated said in the legal complaint.

The transaction is the latest attempt to further the "selfish" interests of News Corp.'s controlling shareholder, the filing added.

"The transaction violates the entire fairness standard both on the basis of price and process."

News Corp. in London was not available for comment but a spokeswoman told the Guardianthat the complaint was "without merit."

News Corp. announced last month that it would pay $663 million for Shine Group, which produces Merlin, Spooks and Masterchef. The deal, if cleared, will see Elisabeth Murdoch take a seat on the News Corp. board and report to deputy chairman Chase Carey.

The Shine buyout is thought to value the British production company launched a decade ago by Elisabeth Murdoch at close to 10.5 times 2010 earnings, before tax, interest depreciation and amortization, a multiple higher than the eight times EBITDA that Warner Bros. paid for U.K. indie Shed Productions last year.

"Shine has an outstanding creative team that has built a significant independent production company in major markets in very few years," Rupert Murdoch said at the time.

It is not clear if there were any other parties interested in acquiring the business or whether any other companies had tabled a bid for Shine.