Joshua Chaffin of The Financial Times writes for Tuesday’s paper that the Dow Jones & Co. board of directors could be put in a precarious position if the Bancroft family that controls the company eschews News Corp. CEO Rupert Murdoch‘s $5 billion bid for the company for a lower bid that guarantees editorial independence of The Wall Street Journal.
Chaffin wrote, “‘They’re going to get sued no matter what they do,’ said Nell Minow, editor of the Corporate Library. ‘The question is whether the litigation will have merit.’
“Under Delaware law, the board is obliged to seek the best price available once it decides to sell the company. It has been sidelined for the moment by the Bancroft family, which controls 64 per cent of Dow Jones voting shares and rejected the first offer from Mr Murdoch’s News Corp in early May.
“The Bancrofts have since softened their stance, and are now trying to agree with Mr Murdoch on safeguards that would protect the editorial independence of the Wall Street Journal in the event of a sale.
“If the Bancrofts and Mr Murdoch can resolve that issue, then the board’s work would be straightforward. At that point, they would begin negotiations to try to extract the highest price.
“Things would become more complicated, though, if another, lower bid were to emerge from a suitor that the Bancrofts found more palatable. There is legal precedent for the board to recommend a lower offer if they can prove it is in the company’s strategic interest. They may also have more lee-way if an offer includes shares as opposed to pure cash.”
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