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NEW YORK — Shares of Dow Jones & Co. jumped more than 10% in early Tuesday trading as Wall Street expected the announcement later in the day of a definitive deal for the long-discussed $60-per-share sale of the financial news and information firm to Rupert Murdoch’s News Corp.
The stock rose as investors seemed confident that a last-minute push got enough members of the Bancroft family that controls the firm to support the transaction.
News Corp.’s board will meet at 4 p.m. ET Tuesday to vote on whether to go ahead with its takeover offer, with observers saying it was looking for more than 30% overall shareholder support from Bancroft family members, with Dow Jones’ board meeting at 7 p.m. ET. As of mid-day, Wall Street observers were expecting a deal announcement.
However, by midday, neither party in the deal was ready to announce a final deal agreement.
Reuters reported late Tuesday morning that one Dow Jones executive in Chicago, John Prestbo, editor and executive director of Dow Jones Indexes, had said that the sale to News Corp. will go ahead.
However, Howard Hoffman, director of internal communications for Dow Jones, could not confirm this. “I don’t know what Mr. Prestbo is referring to,” he said. “We haven’t issued any internal memo. And I would know if we did.”
The expectation Tuesday that the deal would come together by Tuesday evening came after last-minute negotiations following a 5 p.m. ET Monday deadline for family members to decide on the offer. It apparently came and went without bringing a decisive enough Bancroft vote in favor of the deal.
On Monday, News Corp. had threatened to walk away from the deal if it doesn’t get more than the 28% overall voting support from the Bancroft family that it had as of the end of the weekend.
A News Corp. spokesman said the conglomerate was “highly unlikely” to follow through on the deal if the level of support didn’t go higher. He didn’t specify what level of voting support News Corp. would be comfortable with.
However, observers have said News Corp. likely needs Bancroft support of 30% or more to have a comfortable margin going into a fall shareholder vote on the deal, where an overall majority of all shareholders must approve the sale.
The Wall Street Journal, Dow Jones’ flagship paper, reported Tuesday that even as of Monday night, parts of the Bancroft clan were still holding off from supporting the News Corp. deal, some in search for additional money. It mentioned that Bancrofts holding 29% of the overall shareholder vote were supporting the deal as of Tuesday morning.
Dow Jones negotiated an unusual arrangement that would see it create a fund that would cover advisory fees of $30 million-plus payable to firms advising Bancroft family members, including investment banks and law firms, it said.
That arrangement seems to have won over the support of a Denver branch of the Bancroft family that on Friday rejected the sale, citing its desire for a higher price tag.
The $5 billion takeover proposed by News Corp. and made public on May 1 has been heatedly debated within the Bancroft family and on Wall Street in recent weeks.
Meanwhile, LA Web entrepreneur Brad Greenspan, the ex-head of the former corporate parent of News Corp.’s MySpace business, urged Dow Jones late Monday to meet with him to discuss his own alternative proposal for the firm.
In an open letter to the Dow Jones board, which he made public Monday evening, he said he has found “over five highly credible strategic and financial investor groups” interested in a deal with the company.
A key part of his group’s proposal is an investment of $300 million in cash and $300 million in stock and services to fund three joint ventures majority-owned by Dow Jones. They would create new Dow Jones online video channels in Asia, Europe and the U.S., with plans to take them public down the line and give current shareholders a stake in them via the spin-off.
A source familiar with the situation told Reuters that Greenspan’s partners include Intel Corp.’s Intel Capital, Apex Partners, Jana Partners, a unit of Softbank Corp. and Trafelet.
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