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News Corp. Makes Offer for FEG Shares

Jan 10, 2005  •  Post A Comment

News Corp. on Monday said it made an offer to buy the remaining shares in Fox Entertainment Group that it doesn’t already own, following through with a plan most of Wall Street expected would take place once the company completed its reincorporation to the United States.

The transaction, with a value of between $5 billion and $6 billion, will commence Monday afternoon as an exchange offer to all shareholders of FEG. News Corp. owns 82.1 percent of FEG’s equity, but controls 97 percent of the voting power through its ownership of around 59 percent of the outstanding Class A FEG shares and 100 percent of the outstanding Class B shares.

News Corp. is offering FEG Class A shareholders 1.90 shares of News Corp. stock in exchange for each FEG share. The company said that based on FEG’s Friday close of $31.22 a share, News Corp. is offering a premium of more than 7 percent over Friday’s stock price and a premium of nearly 17 percent over FEG’s six-month trading average.

News Corp. said that following the completion of the exchange offer, it will launch the merger of FEG. News Corp. said it expects the entire transaction to be tax-free for FEG shareholders.

FEG’s move back into the News Corp. fold comes six years after FEG’s initial public offering. At the time, the company said it was issuing shares in FEG–which includes the Fox broadcast network, 20th Century Fox studios and the various Fox cable channels–to enhance the value of News Corp.’s U.S. media assets and to provide the then Australian-based News Corp. easier access to the U.S. capital markets. But most analysts expected FEG to be brought back into News Corp. once the News Corp. headquarters moved to the United States last fall.