News Corp. announced Monday that it has initiated a shareholder’s-rights plan that would prevent any one shareholder from acquiring more than 15% of its voting stock -- a move many believe is in direct response to recent attempts by Liberty Media Corp. to increase its voting stake in the media giant.
The shareholder’s-rights plan, also known as a “poison pill,” would not affect Liberty’s attempt last week to increase its voting stake in News Corp. from 9% to 17%, nor would it affect the 29.5% interest currently held by News Corp. chairman Rupert Murdoch and his family.
But the rights plan would trigger if either Liberty or Murdoch tried to increase their stakes by another 1% or more.
The move was largely seen as an attempt to prevent Liberty from acquiring any more than 17% voting stake. According to a prepared statement, the poison pill will allow current News Corp. shareholders to buy additional News stock at half-price.
Each shareholder would get one right to purchase about $80 of News Corp. stock at the discounted price for every share of voting or nonvoting stock they own if the poison pill is triggered. The result would be a flood of shares that would significantly dilute any potential takeover attempt.
News Corp. stock rose 4.7% ($1.50) to $33.61 per share in afternoon trading Monday.
While News Corp. and Liberty insisted that their relationship is still cordial, News Corp. said in a prepared statement that part of the reason for the rights plan was Liberty’s moves to buy more voting stock “without any discussion with, or prior notice to, News Corp.”
Since News Corp. began efforts to reincorporate as a U.S.-based company -- expected to be completed later this week -- a large number of its shares has hit the market as a result of institutional investors in Australia (News Corp.’s current base of operations) having to unload them.