It was long held that to buy Dow Jones (and its Wall Street Journal property) a buyer would have to hit a mythical number above $60 a share called the Hammer Price (named after a longtime Bancroft family lawyer who years ago turned away offers from the Washington Post and New York Times for being too low)
In May, when Rupert Murdoch’s News Corp. launched a friendly takeover attempt, they hit that number (and offering it represented a 65 percent premium over the April 30th closing price for the stock). By legend, it should have been enough to close a deal. Legend wasn’t reality. In an up and down roller coaster of on-again, off-again reports, as recently as yesterday, it was looking like even the Hammer Price wouldn’t be enough to take control of the historic media property. Now it’s looking like the tides have changed again.
The Bancroft family, one of a handful or remaining dynasty’s able to maintain family control of public companies, were looking like they’d largely vote against the deal. The family’s heirs, through inheritance of a special class of shares, have voting rights (approximately 64 percent) far in excess of their actual holdings (approximately 25 percent). Absent further approval, News Corp was ready to walk (or at least threatening as much).
Getting Bancroft approval has been as difficult as getting a consensus in a divided congress. Through the weeks, some title holders have wanted to sell and walk away from a challenged (and changing) media industry. Others have wanted to hold on, to maintain lucrative dividend payments or, insure the integrity of their family’s legacy moving forward. In the press, and the boardrooms, there was heavy posturing about journalistic integrity, about quality-control. There was talk that any deal would need to be contingent on fail-safe’s to protect journalistic quality (and address other non-financial concerns).
Today, it’s a different story. The Wall Street Journal is reporting that a definitive agreement is likely this evening. A Denver law firm that oversees a Bancroft trust with a little more than nine percent of Dow Jones voting rights has given the deal a green light. Citing unnamed sources, the Wall Street Journal added that Bancroft family members controlling half the family’s voting rights (or 32 percent of overall votes) are firmly in favor of the deal now. More may follow.
In a further signal that the deal is moving ahead, the Journal also reported that Boards of Directors for both companies were reported to meet today, presumably to discuss (and approve or deny) final deal terms. News Corp was scheduled to meet at 4pm EDT (2000GMT) and the Down Jones Board is scheduled to meet at 7pm EDT ((2300GMT).
Reportedly a final sticking point is a contingency that News Corp assumes the legal fees of the Bancroft family and its trusts associated with the sale. If true, in the end, posturing and brinkmanship about non financial issues aside, money will be what mattered.
By this time tomorrow, the news may change again, but it’s starting to look very much like the deal is getting done.
The Hammer Price may not have been so mythic after all.
[For a look at a few at a few of the other family dynasties that have a heavy hand in control of public companies, see this earlier Metue article]