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MUMBAI: US media conglomerate News Corporation today announced
that it had signed a share exchange agreement with Liberty
Media.
Under the terms of the agreement, Liberty will exchange its
entire 16.3 per cent economic position (324.6 million Class
A and 188 million Class B shares) in News Corporation for
a 38.4 percent stake (470.4 million shares) in DirecTV, three
Regional Sports Networks (FSN Northwest, FSN Pittsburgh and
FSN Rocky Mountain) and $550 million of cash, subject to a
working capital adjustment.
News Corp believes the transaction will unlock tremendous value
for the following reasons:
The transaction will be immediately accretive to News Corporation’s
earnings per share;
News Corp will divest its stake in DirecTV at an attractive
valuation on a tax-free basis, and;
News Corporation will accomplish an approximately $11 billion
stock buyback representing approximately 16 per cent of the
outstanding stock.
The share exchange agreement is subject to various regulatory
approvals and an affirmative vote by a majority of holders
of News Corporation’s Class B common stock, other than
the Murdoch family and Liberty. If approved, the transaction
is expected to be completed in the second half of calendar
2007.
Following completion of the transaction with Liberty, News
Corporation intends to redeem its stockholder rights plan
and will consider eliminating its staggered board.
With negotiations over the share exchange agreement now completed,
News Corporation expects to continue its previously announced
stock repurchase programme.
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