A major News Corp. and Fox Corp. shareholder opposes Rupert Murdoch's plan to recombine the companies, The Wall Street Journal reported.
Independent Franchise Partners (IFP), a London-based investment firm and one of the largest non-Murdoch holders of News Corp. and Fox, wants other alternatives considered, including a breakup of News Corp., WSJ reported Wednesday.
IFP representatives said that the company told a special committee of News Corp.'s board last month that it thought a combination on its own would fail to realize the full value of the company.
"A straight equity exchange between Fox Corp. and News Corp would dilute and delay the realization of News Corp’s substantial intrinsic value," IFP said in a statement to WSJ.
The investment firm holds about a $700 million stake in News Corp., with around 7% of the A shares and 6.6% of the B shares. It also holds around 6% of Fox's A shares.
IFP said any combination of the companies should be done jointly with the sale of some of News Corp.'s most valuable business units, WSJ reported.
Another shareholder, Irenic Capital, also has questioned Murdoch's plan, and has pushed the company to consider separating its digital real-estate assets and WSJ parent Dow Jones.
Other News Corp. shareholders, according to WSJ sources, are aligned with that view.
Opposition to recombining the two companies could complicate Murdoch’s plans to realign his family holdings.
A majority vote non-Murdoch-family shareholders is required for the deal to go through, News Corp. said.
News Corp. last month said it was exploring a potential merger with Fox Corp. at the behest of Murdoch.
People familiar with the deal told WSJ that the rationale behind the move is to take advantage of bigger scale to pursue acquisitions, compete for digital ad spending, and pursue a sports-betting business.
Murdoch in 2013 divided his holdings, with newspapers and book publishing going into News Corp., and most of the television and film assets going into what eventually became known as Fox Corp.
In 2018, Murdoch agreed to sell Fox’s movie studio and other entertainment properties to Walt Disney Co. in a deal valued at $71.3 billion. Fox became a much smaller company, focused around Fox News and sports channels.
Fox Corp. and News Corp. have struggled to excite shareholders, WSJ reported. Shares of News Corp. are down more than 20% this year, and Fox shares also are depressed.
Murdoch's family trust controls about 40% of News Corp. and Fox Corp. voting rights. The two companies dual-class structures, with the Murdoch family trust mainly holding class B shares, which have more powerful voting rights.
News Corp. owns The Wall Street Journal, the Times of London, HarperCollins Publishers, and Australian cable-television network Foxtel. It also is a major player in online real-estate listings through Realtor.com.
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