So Rupert Murdoch's $5 billion bid for Dow Jones (that's about ten MySpaces, if you're scoring at home) has been confirmed by the company, which issued a statement saying that it is evaluating the offer. What are the odds that it's going to happen? An interesting predictor can be found in Ken Auletta's 2003 New Yorker profile of the Wall Street Journal and the Bancrofts—the family that controls Dow Jones through one of those ever-popular dual-share structures.) Auletta wrote that a sale was indeed a distinct possibility, but also pointed out a couple of stumbling blocks.
Because so much is in play—and because some members of the family appear restless—there remains a real possibility that Dow Jones will be sold. There are several forms that a sale could take. If family members wanted to sell their Class A and Class B shares to a friendly party—perhaps the family-controlled Washington Post—they are, like any other shareholder, free to do so. If they swap their shares for stock in the acquiring company, it would be a tax-free transaction. But, if the Bancrofts decided to sell the roughly forty per cent of the company they own, the sale could become an invitation for a public auction—and a hostile takeover. The law is sufficiently murky about whether a company's directors must use the highest dollar bid or can choose other, more subjective grounds. Three family representatives and one outside director say that the Bancrofts and the board would not automatically spurn a sale if the right company came along with the right offer. One family member who worries that the company may be too small said, "The family has to look at what is best for the company."Will the restless Bancrofts take the money? "They are," Auletta noted, "among other professions, writers, investment bankers, equestrians, and philanthropists." Stay tuned. —balk
Family Business [The NYer]