Breaking Down Barriers: Activist Investors Unite Against Dual-Class Structure
A United Front Against Corporate Governance
In a significant development, activist investor Irenic Capital Management has thrown its weight behind Starboard Value’s efforts to dismantle the dual-class structure at News Corp, controlled by media mogul Rupert Murdoch. This move marks a crucial milestone in the two-year campaign to bring about much-needed governance reforms at the media conglomerate.
The Fight for Fairness
Starboard Value, led by Jeff Smith, has been pushing for the dissolution of the dual-class structure, which grants the Murdoch family disproportionate control over the company. Additionally, Starboard has been advocating for the spin-off of News Corp’s lucrative online real estate business. Irenic Capital Management, led by Adam Katz, has been waging a similar battle, seeking to unlock immediate value for shareholders.
A Premium for Power
In its letter to News Corp’s board, Irenic emphasized its opposition to the dual-class structure, while expressing support for management’s efforts to create value. The firm also suggested that the Murdoch family and other super-voting shareholders should receive a premium if a conversion to a single-share structure were to occur.
Proxy Advisory Firms Weigh In
Notably, prominent proxy advisory firms ISS and Glass Lewis have also backed Starboard’s push for governance reforms. This development adds significant weight to the campaign, as these firms play a crucial role in shaping shareholder opinions.
A History of Resistance
It’s worth noting that a similar attempt to dissolve the dual-class structure at News Corp nearly a decade ago failed, despite receiving support from 90% of non-Murdoch shareholders. The Murdoch family’s control over roughly 40% of the vote through a family trust and supervoting Class B shares has made governance changes a significant challenge.
The Road Ahead
As the shareholder meeting approaches, all eyes will be on News Corp’s response to the mounting pressure from activist investors. Will the company finally yield to demands for governance reforms, or will the Murdoch family’s grip on power remain unyielding? One thing is certain – the outcome will have far-reaching implications for corporate governance and shareholder value.
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