News Corp. agrees to put poison pill measure to shareholders
DOVER, Del. – News Corp. has agreed to settle a lawsuit filed by institutional shareholders and put a proposed poison pill extension up for a vote at the company’s annual meeting in October, attorneys said Thursday.The tentative settlement was reached just days before News Corp. Chairman and CEO Rupert Murdoch’s scheduled deposition in the case and less than three weeks before a Delaware Chancery Court judge was to begin hearing arguments over the company’s decision to renege on a pledge to seek shareholder approval before extending a takeover defense plan put in place in late 2004.”This is a great victory for shareholder rights,” said Stuart Grant, an attorney representing the shareholder group.News Corp. spokesman Andrew Butcher said the company had no comment.News Corp. shares were trading up six cents at $17.96 in early afternoon trading on the New York Stock Exchange.News Corp. adopted the poison-pill defense strategy after Englewood, Colo.-based Liberty Media Corp.’s John Malone, an occasional rival of Murdoch, increased his company’s voting stake in News Corp. to 18 percent in late 2004.The Murdoch family owns about 30 percent of News Corp.After Liberty’s move, News Corp. adopted a shareholder rights plan, commonly known as a “poison pill,” allowing the Murdoch family and other shareholders to acquire News Corp. stock at half price if a shareholder other than the Murdochs acquired 15 percent or more of the stock.As part of the settlement, News Corp. agreed to allow shareholders to vote in October on whether to extend the poison pill measure for two years. The proposal would allow the company to extend the poison pill for an additional year, until October 2009, to address concerns about Liberty Media 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, according to attorneys representing pension funds in the United States, United Kingdom, Australia and the Netherlands.The pension funds filed a lawsuit in October seeking to compel News Corp. to stand behind its pledge not to extend the poison pill provision beyond a 12-month period without shareholder approval. Attorneys for the plaintiffs said the pledge was made to secure shareholder support for News Corp.’s reincorporation from Australia to Delaware in 2004.”From day one, we have consistently said that this case was not about the poison pill, but was about securing the shareholders’ right to vote on the matter,” Grant said in a statement.In a show of protest over the company’s failure to consult them, shareholders at last year’s annual meeting withheld as much as 15 percent of their vote to re-elect four News Corp. directors.Michael O’Sullivan, chairman of the Australian Council of Super Investors, which represents a group of Australian public pension fund investors, said in a statement that the settlement demonstrates that “international co-operation between institutional investors gets results.”Final resolution of the case is subject to approval by Chancellor William Chandler III. Chandler was out of town Thursday, but his office said the trial, which was scheduled to begin April 24, has been taken off his calendar.