Dow Jones board endorses $5 billion News Corp bid

By Robert MacMillan and Kenneth Li

NEW YORK (Reuters) - The board of Dow Jones & Co Inc has endorsed a $5 billion buyout offer from Rupert Murdoch's News Corp, 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 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 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.