Independent Franchise Partners, a major Fox and News Corporation shareholder, has expressed opposition to Rupert Murdoch’s current proposal to recombine his media empire.
The London-based investment firm, which confirmed its position to TheWrap, told the Wall Street Journal that a “straight equity exchange between Fox Corp. and News Corp would dilute and delay the realization of News Corp’s substantial intrinsic value.”
It argues that any combination should involve the sale of key News Corp assets to ensure the company’s stock is valued at more than $30 per share.
IFP, which has reportedly been advising News Corporation since at least July 2020, has fielded several suggestions, including selling its online real estate businesses.
News Corp’s businesses include The Wall Street Journal, Dow Jones, The New York Post, Realtor.com, HarperCollins Publishers, Australian pay TV company FoxTel and real estate advertising firm REA Group.
IFP holds a roughly $700 million stake in News Corp, representing about 7% of its Class A shares and 6.6% of Class B shares. It also holds around 6% of Fox’s Class A shares.
In addition to IFP, investor Irenic Capital Management has also sent a letter opposing the current combination proposal, arguing that News Corp’s fundamental value is at least $34 per share. It also urges News Corp to consider spinning off its digital real estate and Dow Jones businesses. The firm holds approximately 2% of News Corp.’s Class B voting shares.
As of press time, News Corp stock is down more than 19% year to date, trading around $18 per share, while Fox stock is down 17% year to date, trading around $30 per share.
Murdoch’s businesses were split back in 2013 after being housed under the News Corp banner. In 2018, Murdoch agreed to sell Fox’s entertainment assets to the Walt Disney Company in a deal valued at $71.3 billion.
Last month, News Corp announced that it was forming a special committee composed of “independent and disinterested members of the Board” to explore a potential combination with Fox Corporation following the receipt of letters from Murdoch and the Murdoch Family Trust.
The company emphasized that the move would be thoroughly evaluated in consultation with its independent financial and legal advisors to ensure it was consistent with fiduciary duties. It also noted that the committee “has not made any determination with respect to any such potential combination at this time, and there can be no certainty that the Company will engage in such a transaction.”
Representatives for News Corp. and Fox declined to comment.