The FT is reporting that News Corp has settled a lawsuit brought by some of its largest shareholders.
Many of the uninitiated – us included – could be forgiven for thinking a poison pill is something that might be taken by hair metal god CC Deville whilst on “The Surreal Life 6.”
It’s a corporate provision to combat hostile takeovers. When triggered, the “poison pill” allows shareholders to acquire additional shares at below-market prices, essentially increasing the number of shares outstanding and making the takeover prohibitively expensive.
And it’s what Rupe did when John Malone at Liberty Media seemed overly frisky about buying shares (18%, in fact) of Rupe’s baby back in November 2004.
As the FT reports, the deal comes with no small amount of drama:
“At the time, Mr Murdoch said he would seek investor approval before extending the poison pill beyond its one-year term. However, a year later, the company disclosed that it had extended the measure an additional two years without consulting shareholders…It came three weeks before the case was to go to trial, and on the eve of a scheduled deposition of Mr Murdoch, whose family owns 30 per cent of News Corp’s voting shares…
As part of the settlement, News Corp will allow investors to to decide if the poison pill should be extended for an additional two years at its next shareholder meeting in October. We suspect Malone will be positively smiling like a canary through that one.