Stocks of News Corp (NASDAQ: NWSA) rose over 5.68% in previous trading session after the firm reported that Large News Corp shareholders cheered Rupert Murdoch’s decision to cancel a bid to merge the owner of Dow Jones and Fox Corp (NASDAQ: FOX) on Wednesday, as News Corp chose to explore a sale of Move Inc. instead.
The business confirmed on Tuesday that News Corp is in discussions to sell Move, which manages the Realtor.com website, to CoStar Group.
On Wednesday afternoon, News Corp shares were up more than 5%, trimming some earlier gains, as shareholders applauded the decision to forego the Fox merger and instead seek the sale of Move at a considerable premium to what News Corp paid for the firm in 2014.
In 2014, News Corp paid around $1 billion for Move. According to Reuters, it is in discussions to sell its interest in Move for more than $3 billion.
Since the merger of Fox and News Corp was announced in October of last year, a number of big shareholders on both sides have been hostile to the arrangement.
- Rowe Price, News Corp’s largest shareholder with a roughly 12% stake, had previously raised worries that the transaction would undervalue the company. Portfolio manager Vincent DeAugustino applauded News Corp’s decision to cancel the transaction on Wednesday.
“We welcome News Corporation’s decision to forego such a deal while it evaluates alternative ways to generate value,” he added in a statement.
On Tuesday, activist investment company Irenic Capital, which had also opposed Fox and News Corp’s proposed merger, hailed the decision not to proceed.
Cowen & Co’s Doug Creutz claimed investors were happy by the decision to abandon a prospective merger, claiming that pressure from investors such as T Rowe Price influenced Murdoch’s decision to pursue the acquisition.
Because of the recent surge in News Corp shares, Fox would have had to pay a considerable premium for the merger to be approved, something the Murdochs did not think they could justify to shareholders. On Wednesday, Fox stock was up around 2%.
While News Corp’s decision to sell Move was well received, doubts about the firm’s non-media assets, including its interest in Australian real estate giant REA Group Ltd, persist.
“The other key question is whether News Corp distributes pro-rata shares in REA to its shareholders in addition to selling Move. That would clear away the company’s real estate assets and streamline the structure of News Corp, which is desperately required given the company’s complexity “Craig Huber, media analyst at Huber Research, agreed.
