News Corp. Shareholders Will Vote on ‘Poison Pill’ Measure

Apr 7, 2006  •  Post A Comment

News Corp. will leave it to shareholders to decide whether the Rupert Murdoch-controlled company should keep in place a controversial measure that would prevent a stockholder from obtaining a controlling stake in the media giant.

As part of a settlement reached Thursday of a lawsuit filed by several institutional shareholders, News Corp. agreed to allow investors to vote on a two-year extension of the company’s so-called “poison pill” at the next annual meeting, set for October.

A poison pill allows a company to issue large blocks of stock to dilute the stake of a shareholder who might be looking to take control of the company. News Corp. adopted the poison pill in fall 2004 after John Malone’s Liberty Media began snapping up shares of News Corp. and amassed more than 18 percent of News Corp.’s outstanding shares. The move made Liberty the second-largest shareholder behind Mr. Murdoch and his family, who collectively own a 29.5 percent stake.

The poison pill measure initially was to last a year, but News Corp. extended it last August without putting it to a shareholder vote. That triggered a revolt among some shareholders, who filed a lawsuit in October in the Delaware Chancery Court.

The proposal laid out in News Corp.’s settlement with shareholders includes a provision that ensures investors have the right to vote on the poison pill every year for the next 20 years.