It’s a bit early to do much in the way of analysis yet, but Rupert Murdoch has made a bid through his News Corporation to buy Dow Jones, including the prestigious Wall Street Journal. The bid is for $5 billion at $60 a share, and already the share price has risen to $56 a share. The company is more usually valued at around $35 a share, and the substantial premium is getting market followers seriously concerned that the core Dow Jones investors may take the money.
The Bancroft family is cited as a major shareholder controlling 24% of the stock, but with voting control. If Bankcroft sells, then it is assumed that the rest of the public will follow suit and the bid will be supported by the Board.
We have no insight into the Bancroft state of mind, but Murdoch seems to feel the need to re-assert himself after the near miss of losing personal control of News Corp, when Liberty Media’s John Malone kept stake building within News Corp and threatened to undermine Murdoch’s control unless he sold him DirecTV, a deal that has now been agreed, but by no means completed.
Murdoch perhaps sees himself as a convert to web based businesses having bought MySpace and game site IGN, and perhaps sees some upside in Dow Jones on the internet, perhaps in real time feeds and news feeds.
The bid came as a complete surprise, and is out of character with prior acquisitions by Murdoch which have focused on his judgment of the tastes of the ‘average’ man in the street, about which he has nearly always been proven to be right.