July 21 Time Warner Inc's board moved to
prevent its shareholders from calling special meetings,
effectively throwing up a hurdle to any quick move to approve a
potential takeover by Rupert Murdoch's Twenty-First Century Fox
Fox made an offer for Time Warner for about $80 billion or
about $85 per share in a mix of stock and cash that Time Warner
rebuffed, both companies disclosed last week.
Time Warner previously allowed as few as 15 percent of its
shareholders to call a special meeting, factors that could help
a takeover bid. The move, revealed in a regulatory filing on
Monday, was not preempted by any particular investor buying
large amounts of Time Warner shares but rather to give the board
the ability to defend itself from an unsolicited bid, two
sources close to the matter said.
The sources said the board believed the move was in the best
interests of all its shareholders. "When you are facing a
hostile bid, you don't want to give the bidder the ability to
artificially preempt that process," one of the sources said.
The amended bylaw is temporary, however, as the board said
it plans to reinstate the special meeting provision during its
2015 annual meeting, according to the filing.
Similar moves have been taken by other takeover targets in
recent years, including Airgas Inc, which eventually
implemented a poison pill that blocked a $5.9 billion hostile
bid from Air Products and Chemicals Inc. The sources,
who declined to be identified because the discussions are
private, would not speculate whether Time Warner's board would
also put a poison pill in place.
A spokesman for Time Warner, which owns cable networks TNT
and CNN, pay-TV channel HBO and Warner Bros movie studio,
declined to comment.
Time Warner Chief Executive Jeffrey Bewkes told his
employees in video that the company's standalone strategic plan
would create value "superior to any proposal" that Fox could
Part of the issue involves the mix of cash and stock and
lack of control of Time Warner's shareholders if a deal should
go through, sources told Reuters last week.
Murdoch controls Fox through a 39 percent stake in special
shares that were not part of the offer.
Fox offered 60 percent in common stock and 40 percent cash.
Several Time Warner shareholders told Reuters last week that
Fox may have to raise the bid to as much as $95 a share boosting
its cash component to seal a merger.
(Reporting by Jennifer Saba and Nadia Damouni in New York;
Editing by Bernard Orr)