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News Corp. Shareholders Can Pick Their Poison

4/06/2006 11:37 AM Eastern

News Corp. settled a class-action suit Thursday by agreeing to put its shareholder’s-rights plan (also known as a poison pill) up for a vote at its next annual meeting.

The suit, brought by a group of international institutional investors last year, argued that News Corp. broke a promise to shareholders not to extend the poison pill without first allowing them to vote on the matter. News Corp. renewed the poison pill in August without a shareholder vote.

The poison pill would make it prohibitively expensive for an individual shareholder to increase its voting stake in News Corp. above 15%.

News Corp. initiated the poison pill in late 2004, just weeks after Liberty Media Corp. increased its voting stake in the media giant from 9% to 18%. That move made Liberty the second-largest voting shareholder behind the Murdoch family -- led by News Corp. chairman Rupert Murdoch -- with about 30% of the vote.

According to the settlement, News Corp. agreed to put forth a special proposal at its annual meeting in October, allowing shareholders to vote on whether to extend the poison pill for two years. The proposal would also allow News Corp. to extend the pill for one additional year (until October 2009), but only if necessary to address concerns over possible moves by Liberty in acquiring a controlling interest in News Corp.

If the proposal is approved, shareholders will have the right to vote on subsequent poison-pill provisions for the next 20 years.

The settlement, still subject to court approval, also comes days before Murdoch was scheduled to give a deposition in the case.

“This is a great victory for shareholder rights,” said Stuart Grant, whose firm, Grant & Eisenhofer P.A., is counsel for the shareholder group, in a press release.

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