Options market predicting Murdoch gets Dow Jones

Dana Cimilluca of The Wall Street Journal writes on its Deal Journal blog that the options market is betting that News Corp. CEO Rupert Murdoch may be successful in his bid to acquire Dow Jones & Co., the parent of the Journal.

Cimilluca wrote, “According to a research report from Citigroup analyst William Bird that was distributed today, the options market is pricing in a 65% probability that a buyout offer for Dow Jones is accepted. That, of course, follows the surprise $60-a-share offer for Dow Jones made last month and announced this month by News Corp. chief Rupert Murdoch. Citi, which doesn’t appear to have an investment-banking role on the possible deal, said it assumes the odds that News’s offer is raised to $65 and accepted is 65%.

“The prediction contrasts with that of at least one other analyst, Richard Greenfield of Pali Research, who this week said that after being rebuffed by the Bancroft family that controls Dow Jones, Murdoch may walk away. While Murdoch hasn’t ruled out an increase in his offer, he has said it represents ‘a full and more-than-fair price,’ leading some to believe no boost will be forthcoming.

“Bird, who like others puts little stock in the possibility that another bidder for Dow Jones will emerge, may not have known how right he was when he acknowledged in the report the difficulty of predicting ‘what’s in the hearts and minds’ of the Bancrofts.”

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