Rupe is running scared.
News Corp. said Thursday it could still seek a trial over its anti-takeover provision if shareholders don’t approve the measure at their next meeting.
The news clarifies the conglom’s stance on a settlement it reached with shareholders who sued the company for refusing to put the anti-takeover defense, called a poison pill, to a vote.
Suit was set for trial this month in Delaware Chancery Court, but was knocked off the docket after News Corp. agreed to let shareholders have their say. But they may take a tough line.
“If stockholders vote against the plan, the company has the right to treat the vote as advisory and proceed with the litigation,” it said in a statement.
News Corp.’s board adopted the measure in 2004 to fend off a potential bear hug by John Malone. The Liberty Media chief surprised News Corp. chief Rupert Murdoch by acquiring a big chunk of News Corp. voting stock.
But Australian and European investors were infuriated. They claim News Corp. promised to let shareholders vote on whether to keep the poison pill in place. They said News Corp. made that pledge as it sought their support for a shift in domicile from Australia to the U.S.
After News Corp. successfully completed its move, it announced plans to keep the pill in place for at least two more years. Company indicated that whatever it said to investors previously wasn’t binding.
Shareholders, including two U.S. pension funds, sued.
A poison pill makes it extremely complex and expensive for a raider to launch a hostile takeover of a company.
But shareholders are wary of the defense, since it can stymie a takeover that might be lucrative for them, even if it’s not embraced by a company’s management.
Australian securities law requires companies to put poison pill measures to shareholder vote. U.S. law doesn’t.
“News Corp. always made it about Malone,” said Stuart Grant of Grant & Eisenhofer, counsel for the shareholders group.
“We have consistently said that this case was not about the poison pill but was about securing shareholder right to vote on the matter as promised by News Corp.” He said shareholders aren’t necessarily averse to the measure.
News Corp.’s annual meeting is in October.
News Corp. and Liberty have been negotiating on and off for more than a year to construct an asset swap or deal that would unravel Liberty’s 18% stake, but the two sides seem at an impasse.
“In the interim, we hold an asset that we like, and we feel good about, and frankly one that we might be able to exert more influence upon,” Liberty CEO Gregory Maffei said during a conference call last month.