Floyd Norris asks a provocative
question today behind a NYT firewall: Could An Underbid Win
Dow Jones?
(Update: The whole entry’s now up
at DealBook, for free.)
The bulk of shareholders would disagree, of course, but if the board voted
to approve a deal with Pierson and G.E. in return for, say, $55 a share in
cash or stock, and the Bancroft family said it would not take any price from
Mr. Murdoch, who has offered $60, public shareholders might go along and the
courts might agree.
I see two big problems here. The first is that the days of "not taking
any price from Mr Murdoch" are clearly over: Dow Jones is in play, and
Murdoch is the presumptive buyer. And the second problem is actually pointed
up by Norris himself:
The Bancrofts control the super-voting shares but cannot sell control of
the company, because the shares lose their super-voting privileges if sold.
The point here is that if the Bancrofts sell their shares to GE, Pearson, or
anybody else, then the current public shareholders would – finally –
control the company. In order for a GE-Pearson underbid to succeed, the underbidders
would have to persuade a majority of DJ’s public shareholders to accept less
money than Rupert Murdoch is offering. And I can’t see an easy way of doing
that.
Certainly, the markets don’t believe that an underbid is in the offing. Dow
Jones is trading at $58.84, and indeed briefly spiked over the $60 mark on Friday.
At the moment, a credible bid would have to come at $60 or above, I think.