Rupert Murdoch’s News Corp has announced a $US1 billion program that will include the B Class voting shares, but will sterilise the existing stake of the family in the voting shares.
A wide range of local companies have announced buybacks, ranging from the gigantic $6 billion from the Commonwealth Bank and the $2.5 billion from the NAB to the $2 billion of retailer, Woolworths.
With an Aussie dollar value of $1.3 billion the buyback, the first and double the size of the authorised buyback in place since 2013, is a large one by Australian standards.
The buyback comes on top of what has been an active M&A year for News with deals to buy Investors Business Daily for $US275 million, a book publisher to go with Harper Collins for $US340 million and the OPIS oil and commodities data business for $US1.15 billion.
The buyback takes the total cost of this spending splurge to more than $2.7 billion, or over $A3.1 billion.
Earlier this year News raised $US1 billion in a debt issue that was boosted from the initial $US750 million. That added to the $US2.2 billion in cash at June 30.
At the same time as this buying spree, News Corp has cut more than 100 journalist and back-office jobs at The Australian and elsewhere in the media business in Australia.
“These landmark decisions follow our most profitable year since the launch of the new News Corp in 2013 and are a tangible sign of our confidence in the inherent value and enormous potential of our businesses,” Robert Thomson, Chief Executive of News Corp said in a statement.
“With the Board’s active support, we are acutely focused on long-term value for investors, balancing strategic investments and capital returns. Our robust cash balance and strong free cash flow have enabled us to launch a much larger, more aggressive buyback program that we intend to begin after our quiet period ends.”
The buyback sees the poison pill arrangement in place since the company was spun off in June 2013 from the original News Corp (now Fox Corp). There’s a new agreement with the Murdoch family in place instead.
News said in the statement to the US Securities and Exchange Commission that the stockholders agreement with the Murdoch Family Trust ensures no action will be taken that would result in the Trust and Murdoch family members together owning more than 44% of the outstanding voting power of the Class B common stock, or would increase the Trust’s voting power by more than 1.75% in any rolling twelve-month period.
That’s actually a tightening of the level of control because the trust now holds, with a small holding by Rupert Murdoch, just over 38% of the voting shares.
Interestingly, the agreement seems to have a clause for life without Rupert Murdoch and the shares are dispersed within the family.
“The stockholders agreement will terminate upon the Trust’s distribution of all or substantially all of its Class B common stock.”
