Murdoch Family Trust Unloads 14.2M News Corp Shares in Major Restructuring
News Corporation’s Murdoch Family Trust is selling 14.2 million Class B shares in a significant secondary offering, marking a pivotal step in a broader ownership restructuring that reshapes voting control and family interests.
- 14.2 million Class B shares offered by Murdoch Family Trust-related selling stockholders
- News Corp itself not selling shares or receiving proceeds from the offering
- LGC Holdco to acquire remaining shares, backed by $1 billion collateralized loan
- Post-transaction, LGC Holdco controls 33.1% of Class B shares with voting managed by Cruden 2
- Offering underwritten by Morgan Stanley amid detailed risk disclosures and governance changes
Background and Offering Details
News Corporation (ASX, NWS; Nasdaq, NWS) has announced a secondary offering of 14,182,161 shares of its Class B common stock by selling stockholders affiliated with the Murdoch Family Trust (MFT). Notably, the company itself is not issuing any new shares and will not receive proceeds from this sale. The offering is part of a complex restructuring involving the termination of longstanding litigation related to the MFT and the redistribution of shares among newly established family trusts and a Delaware entity, LGC Holdco, LLC.
The shares are listed on Nasdaq and the Australian Securities Exchange (ASX), with recent trading prices at $33.40 (Nasdaq) and A$51.08 (ASX) respectively. Morgan Stanley is acting as the sole underwriter for the offering, which remains subject to completion and final pricing.
Ownership Restructuring and Voting Control
Following the resolution of the Nevada litigation involving the MFT, shares previously held by departing family members; Prudence MacLeod, Elisabeth Murdoch, and James Murdoch; are being sold or transferred. The selling stockholders are trusts established by Cruden Financial Services LLC, the trustee of the MFT, for the benefit of these departing members and their descendants.
Half of the MFT’s shares were transferred to these departing member trusts, with the other half moved to the LGC Family Trusts, which contributed their shares to LGC Holdco. Subject to the offering’s closing, LGC Holdco will acquire all remaining shares from the departing member trusts not sold in this offering, funded by a $1 billion loan secured by pledged shares of News Corp and Fox Corporation stock.
Post-transaction, LGC Holdco will beneficially own approximately 33.1% of News Corp’s Class B common stock. Voting power over these shares will be exercised by Cruden 2, LLC, managed by a director appointed by Lachlan K. Murdoch. While Lachlan K. Murdoch may be deemed the beneficial owner of these shares under certain rules, he disclaims such ownership. The departing members have also agreed to a 12-year standstill restricting their acquisition of News Corp securities.
Governance and Anti-Takeover Provisions
The company has entered into a new stockholders agreement with the LGC Family Trusts and LGC Holdco, maintaining a collective ownership cap of 44% voting power alongside the Murdoch individuals. This agreement includes rights of first refusal and customary registration rights. News Corp’s governance structure features dual-class stock with limited voting rights for Class A shares, advance notice requirements for stockholder proposals, and restrictions on stockholder actions by written consent, all of which serve as anti-takeover measures.
The concentration of voting power in LGC Holdco, combined with these governance provisions, could deter unsolicited acquisition attempts and influence the outcome of stockholder votes. The company also maintains active stock repurchase programs that may affect ownership percentages.
Risks and Market Implications
News Corp highlights a range of risks including market price volatility, potential dilution from future share issuances, and the impact of large share pledges as collateral for loans. The offering and subsequent share transfers could influence market liquidity and investor perception. The company’s disclosures emphasize the importance of reviewing detailed risk factors, including those related to regulatory compliance, international operations, and ownership conflicts due to overlapping interests with Fox Corporation.
Investors should also consider the implications of the lock-up agreements restricting sales by key insiders and LGC Holdco for up to 12 months, as well as the potential for future sales by LGC Holdco to affect share price dynamics.
Looking Ahead
This offering and ownership restructuring mark a significant chapter in News Corp’s corporate evolution, with Lachlan K. Murdoch positioned to exert considerable influence through voting control mechanisms. Market participants will be watching closely for the offering’s completion, the performance of shares post-sale, and any further developments in governance or strategic direction.
Bottom Line?
As the Murdoch family reshapes its stake, News Corp’s share dynamics and control structure enter a new phase with broad market implications.
Questions in the middle?
- How will the market absorb the large volume of shares sold and pledged as collateral?
- What strategic moves might Lachlan K. Murdoch pursue with his enhanced voting influence?
- Could future sales by LGC Holdco trigger further volatility or dilution concerns?
