UPDATE 1-Dow Jones says taking no action on News Corp bid
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NEW YORK, May 2 (Reuters) - Dow Jones & Co. DJ.N decided on Wednesday to take no action on a $5 billion takeover bid by Rupert Murdoch's News Corp. NWSa.N, saying the controlling shareholders, the Bancrofts, would veto a deal.
The decision could open up Dow Jones, publisher of the Wall Street Journal, to lawsuits from shareholders who were hoping to take advantage of Murdoch's highly priced offer, legal and governance experts say.
Dow Jones shares had soared nearly 55 percent on Tuesday after the company said the board was evaluating the bid, which was priced at a 65 percent market premium at $60 per share.
But a representative of the Bancroft family told the board on Wednesday that they would vote shares constituting about 52 percent of voting power against the News Corp. bid, Dow Jones said.
"Approval of a merger under Delaware law requires approval of a majority of the outstanding voting power of the corporation. Accordingly, the Dow Jones Board of Directors has determined to take no action with respect to the proposal," the company said.
News Corp. was not immediately available for comment.
The question now is whether Murdoch will raise his bid. Buying Dow Jones would help round out his media empire by adding the influential Wall Street Journal ahead of his planned fourth-quarter launch of the Fox Business Channel.
Dow Jones could provide the new cable channel with real-time financial news from Dow Jones Newswires, a growing Internet presence, and analysis from Barron's.
"The ball's back in Rupert's court," said Benchmark Co. analyst Ed Atorino, adding that Murdoch may raise his bid.
"I can't believe he's going to make one shot and just walk away," Atorino said.
Soleil Media Metrics analyst Laura Martin agreed.
"He has to raise the price, that would be my guess. I don't think Rupert's just going to give up and go away," she said.
If Murdoch fails to make another bid, and no comparable offers emerge, shareholders are likely to sue the board, or the Bancrofts, for failing to look after investors' interests, said legal experts. Continued...
