Rupert Murdoch reversed course on Tuesday and withdrew a proposal to re-unite News Corp (NWSA.O) and Fox Corp as the company is also exploring a sale of its stake in Move Inc., which operates the Realtor.com website, according to a regulatory filing and sources familiar with the process.
Several top shareholders had publicly said they opposed the proposed plan, and on Tuesday News Corp said in a statement that the combination was “not optimal for shareholders of News Corp and Fox at this time.”
The deal would have reunited the media empire Murdoch split nearly a decade ago.
No offer was exchanged between News Corp and Fox Corp before merger deliberations were abandoned, according to sources familiar with the process, who said pushback from News Corp shareholders played a role in those plans being scrapped.
Murdoch proposed reuniting his media empire last fall, arguing that together the publishing and entertainment companies he split apart in 2013 would give the combined company greater scale in news, live sports and information, sources said.
Several people close to the Murdochs viewed the effort to reunite the media companies as driven by the 91-year-old Murdoch’s succession planning to consolidate power behind his son and Fox head Lachlan Murdoch, a notion the company described as “absurd” in November.
Some of News Corp’s larger shareholders, including Independent Franchise Partners and T. Rowe Price (TROW.O) balked at the idea.
Activist investment firm Irenic Capital, which was among the first to say that the proposed reunion would likely undervalue News Corp, on Tuesday applauded the decision to not move forward.
“This is the right decision,” Irenic’s chief investment officer Adam Katz said. “Looking ahead, News Corp has an opportunity to create substantial value for its owners.”
In a letter to News Corp employees on Tuesday, News Corp Chief Executive Robert Thomson said, “In my note to you in October, I said the Special Committee assessment would have no impact on our current operations; that was indeed the case, and remains so following today’s announcement.”