News Corp. Creates Poison Pill
By Sophie Hares
SYDNEY (Reuters) - Rupert Murdoch's News Corp. Ltd. moved to ward off any hostile bid from U.S. cable company Liberty Media Corp. with a plan to issue stock options to dilute the stake of any predator.
John Malone's Liberty began a transaction last week that could increase its voting stake in News Corp. to about 17 percent from 9 percent, raising speculation it could launch a takeover bid for Murdoch's media empire.
Under a defense announced on Monday, News Corp. said it would give its shareholders the right to buy one News Corp. share at half price for each share they own, if any party buys a 15 percent stake in the company. Shareholders would be able to buy up to $80 of half-price shares.
The strategy would exclude the purchaser of the 15 percent stake, providing a "poison pill" defense against anyone plotting to take control of News Corp. from 73-year-old Murdoch and his heirs apparent, sons Lachlan and James.
News Corp said its move was prompted by Liberty's decision to engage investment bank Merrill Lynch in a hedging transaction for more than 80 million News Corp. Class B shares.
"There was no communication with the company about that decision before it was made, and it's too early to tell what Liberty's intentions are, but we're not necessarily treating them as friendly," said News Corp. spokesman Greg Baxter.
Liberty's move sparked talk that it could launch a bid or press Murdoch to buy some of Malone's assets, such as its stake in the Discovery cable network.
Some analysts have speculated Malone and Murdoch could be hatching a plan to merge their media empires.
"Murdoch is saying so far so good, but don't push it," said a second analyst, who declined to be named.
Murdoch, whose family owns 29.5 percent of News Corp. voting stock, said last week he was not losing any sleep over Liberty's move.
Think about it, if there are a number of unaffiliated stockholders willing to form a coalition of voting shares greater than Murdoch's 29.5% of voting stock, plus his allies, we could kick him off the Board and change the place from the inside.
A big idea, sure? Would it work? Probably not. But hey, we're past the baby step stage in this war.