It is clear by now that the families which control the majority of the voting shares in Dow Jones (DJ) have no obligation to sell the company to News Corp (DJ) even at the huge premium that has been offered. As is true with The New York Times and The Washington Post Company, the super-majority shareholders can vote as they please. It also appears that there is a section in the Dow Jones articles of incorporation that says that the board must protect the independence of the firm’s products.
If the offer is rejected and nothing in terms of a purchase or merger replaces it, the shares would almost certainly drop sharply from their $56 level. A number of analysts think the shares would go below the price the day of the offer-$36. The low in the months before that was $33, so that may be a reasonable floor.
Since the offer was first leaked, about 74 million shares have changed hands, so there has been a buyer for each share. If the stock falls to $33, it will have lost $23 per. That translates into an aggregate loss of $1.7 billion. Of course, each day the shares trade at the higher price, the potential amount wiped out goes up.
Let’s hope they all bought the June puts.
Douglas A. McIntyre
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