New Murdoch Family Agreement Caps Voting Power, Raises Governance Questions
News Corporation has completed a $450 million secondary offering of Class B shares by key Murdoch family trusts, alongside a new stockholders agreement that reshapes family voting power and share transfer rights.
- 14 million Class B shares sold in secondary offering at $31.98 per share
- No proceeds raised for News Corp; shares sold by Murdoch family trusts
- Termination of prior Murdoch Family Trust stockholders agreement
- New agreement caps Murdoch family voting power at 44%
- Rights of first refusal and registration rights granted to company
Secondary Offering Details
News Corporation has successfully closed an underwritten secondary public offering involving 14,071,293 shares of its Class B common stock. The shares, sold at $31.98 each, were offered exclusively by certain Murdoch family trusts, with Morgan Stanley & Co. LLC acting as the underwriter. Importantly, the company itself did not issue new shares nor receive any proceeds from the sale, marking this as a purely secondary transaction among existing shareholders.
New Stockholders Agreement Replaces Prior Pact
Concurrently, News Corp terminated its previous stockholders agreement with the Murdoch Family Trust, replacing it with a new agreement involving LGC Holdco, LLC and three family trusts benefiting Lachlan, Grace, and Chloe Murdoch. This new pact maintains a collective voting power cap of 44% for the Murdoch family interests, ensuring that their influence remains significant but controlled. The agreement also includes provisions requiring the trusts and LGC Holdco to forfeit votes if necessary to uphold this cap, except in cases where individual Murdoch family members vote differently.
Governance and Share Transfer Controls
The updated agreement grants News Corp a right of first refusal on any underwritten public offering of Class B shares held by the family trusts or LGC Holdco, except when shares are sold to Murdoch individuals or their affiliates. Additionally, the family trusts and LGC Holdco receive customary registration rights, facilitating future share sales under regulatory compliance. These mechanisms collectively balance the family's control with corporate governance safeguards.
Legal and Procedural Framework
The offering and agreements were supported by comprehensive legal documentation, including underwriting agreements, termination agreements, and new stockholders agreements, all executed with appropriate legal counsel. Lock-up agreements restrict share sales by key insiders for periods ranging from 30 days to 12 months, underscoring the controlled nature of share liquidity post-offering. The company also confirmed compliance with all relevant securities laws and regulatory filings.
Implications for News Corp and Investors
While the offering does not inject new capital into News Corp, it represents a significant reshuffling of ownership stakes within the Murdoch family, potentially affecting voting dynamics and governance. The maintenance of the 44% voting cap signals a continued balance between family influence and broader shareholder interests. Investors will be watching closely for how these changes influence strategic decisions and shareholder engagement going forward.
Bottom Line?
News Corp’s refreshed family governance and share structure set the stage for a new chapter in its shareholder dynamics.
Questions in the middle?
- How will the new 44% voting cap influence future corporate governance decisions?
- What impact might the right of first refusal have on future share liquidity and market dynamics?
- Will the Murdoch family trusts pursue further share distributions or sales under the new agreement?
