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To Defend Against Liberty Media, News Corp. Adopts Poison Pill

Nov 8, 2004  •  Post A Comment

In a move designed to prevent John Malone’s Liberty Media from being able to launch a hostile takeover, Rupert Murdoch’s News Corp. on Monday hastily adopted a plan to issue more shares if Liberty attempts to raise its stake beyond 15 percent of News Corp.’s voting stock.

The response comes after Liberty last week initiated a transaction that could raise its voting stake in News Corp. to 17 percent from its present level of 9 percent. While hitting the 17 percent threshold won’t trigger the so-called poison pill, it will kick in if Liberty-or anyone else-goes beyond that level. The poison pill will also be triggered if another party accumulates 15 percent of News Corp.’s voting stock.

As part of the poison-pill plan, News Corp. said it would provide shareholders the right to purchase one share at half price for each share they own, up to $80 per share. The plan effectively dilutes the stake of an aggressive buyer by providing existing shareholders the chance to increase their stakes.

Liberty in the past year has increased its stake in News Corp., causing some Wall Street analysts to speculate that Mr. Malone might be angling to buy some News Corp. content properties.