Rupert Murdoch’s $5bn bid for Dow Jones Inc. places the Bancroft family, which owns 52% of the voting stock in an interesting position. They have a proprietorial relationship with the company, especially with the flagship newspaper, the Wall Street Journal, yet the offer must be arresting. They must know that they are sitting on a melting iceberg, and it is unlikely that a similar valuation will come along any time soon if they simply ignore it.
Dow Jones has hired Goldman Sachs to advise it, and the Bancrofts have hired Merril Lynch. This is a tacit recognition that a transaction of some sort is on the horizon. Both have also retained high-powered law firms, recognizing that they face some serious litigation risk from the other shareholders if this falls through.
If a white knight emerges, who will it be? If nobody appears I suspect Murdoch wins, but my bet is that someone will. I doubt that private equity will look at this because it isn’t a deal that makes any sense on its own at this price. The premium places it firmly is the area of a strategic buyer, and there are not too many companies that can command the resources to accomplish a $5bn media deal. No print-only newspaper will be very excited about this kind of premium, and the deal only has a rationale if you couple the Journal and its online content with another similar entity. So it’s either the online news content providers, the major Internet companies or Mr. Murdoch.
