UPDATE 4-Dow Jones board endorses $5 billion News Corp bid
(Adds information about Bancroft meeting, byline)
By Robert MacMillan and Kenneth Li
NEW YORK, July 18 (Reuters) - The board of Dow Jones & Co Inc DJ.N has endorsed a $5 billion buyout offer from Rupert Murdoch's News Corp NWSa.N, sending the deal to the controlling Bancroft family for final approval.
The 16 members of the board, which met for several hours on Tuesday, were not unanimous in their decision, but a "strong majority" voted to recommend approving the deal, said one source familiar with the matter.
The board "has determined that it would be prepared to approve, and recommend to the Dow Jones stockholders, including the Bancroft Family stockholders, a merger agreement," Dow Jones said in a statement.
Bancroft family members, who control 64 percent of Dow Jones' voting shares, are evaluating the offer, the company said.
One source familiar with the situation said a meeting of the Bancroft family would be held in Boston on Monday.
At the meeting, Bancroft members will be given presentations about the deal and then the opportunity to sign a voting agreement saying how they would vote, a separate person familiar with the situation said.
For the deal to be approved, a majority of Dow Jones shares need to be voted in favor. Assuming most of the stock held by non-Bancroft shareholders is voted in support, the News Corp proposal needs to win over about half the Bancroft family stock, the second source said.
The Wall Street Journal said two Bancroft directors, including Christopher Bancroft, did not vote at the Tuesday meeting, while two other Bancroft directors, including family trustee Michael Elefante, voted in favor of the deal.
News Corp. said in a statement it was grateful to the Dow Jones board for its "strong vote of support."
Shares in News Corp (NWS.AX) rose 1.6 percent to A$27.98 in Wednesday trade in Sydney. Dow Jones closed down about 1 percent at $56.45 in New York on Tuesday before the news was announced.
News Corp. proposed in April to buy all outstanding shares of Dow Jones' common and Class B stock for $60 per share.
The rich, 65 percent premium was welcomed by many shareholders, although a number of Bancrofts opposed the bid because they fear that Murdoch would use the platform provided by Dow Jones's news operations, particularly the Journal, to aid his business interests.
BANCROFTS THINK IT OVER
Dow Jones publishes the Journal, the Barron's investor newspaper and the MarketWatch.com financial news Web site. It also owns Dow Jones Newswires, which competes with Reuters Group Plc RTR.L and Bloomberg in providing financial news.
Christopher Bancroft, who has been seeking to buy up Dow Jones Class B "super-voting" shares in a bid to block a sale to Murdoch, did not return a telephone call seeking comment. News Corp. and Dow Jones declined to say how board members voted.
The possibility remains that enough members of the Bancroft family and other Class B shareholders could block a sale. Analysts have said that could cause the Dow Jones's stock price to plummet and possibly spur a round of lawsuits by outside shareholders.
Legal experts have said, however, that legal action against the Bancrofts -- including those who are members of Dow Jones' board -- would likely not succeed.
Internet entrepreneur Brad Greenspan, who offered to buy a 25 percent stake in Dow Jones at $60 per share, said before Dow Jones released its statement late on Tuesday that he remained "engaged in the process." He was not immediately reachable for further comment.
The deal that Dow Jones is prepared to recommend would allow a limited number of Dow Jones stockholders the choice of receiving shares in a News Corp. subsidiary that would hold Dow Jones. This would ease the tax impact on shareholders who could participate.
The shares would be exchangeable for shares of News Corp.'s Class A common stock. (Additional reporting by Megan Davies in New York)
