Rupert Murdoch cancels proposed merger between Fox and Information Corp

Rupert Murdoch, Chairman of News Corp and Co-Chairman of 21st Century Fox, arrives at the Sun Valley Resort for the annual Allen & Company Sun Valley Conference July 10, 2018 in Sun Valley, Idaho.

Drew Angerer | Getty Images

Rupert Murdoch has withdrawn his reunification proposal Fox Corp and News Corp.

Fox said Tuesday its board received a letter from Murdoch, its chairman, and his son and Fox CEO Lachlan Murdoch, which “determined at the time that a combination is not optimal for shareholders.”

The withdrawn proposal comes as News Corp was in advanced discussions to sell its stake in Move Inc.,’s parent company, to a commercial real estate company CoStar groupsuch a person familiar with the matter.

News Corp confirmed in a regulatory filing Tuesday that it is in talks with CoStar over a possible sale of its stake in Move.

“Each potential transaction would support News Corp’s strategy to optimize the value of its Digital Real Estate Services segment while strengthening’s competitive position in the marketplace,” News Corp said in the filing. News Corp added that there was no assurance that a transaction would result from the talks and would not comment further on the matter at this time.

A spokesman for CoStar Group said in a statement Tuesday that the company “continuously evaluates M&A opportunities across a broad range of companies to maximize shareholder value.”

A News Corp spokesman did not respond to requests for further comment on the matter. Reuters first reported on the deal talks.

In addition to Dow Jones, publisher of the Wall Street Journal, News Corp also owns assets such as book publisher HarperCollins and the New York Post. In 2014, News Corp acquired an 80% stake in Move. REA Limited Group, an Australian real estate company in which News Corp holds a 61.6% interest, acquired the remaining 20% ​​stake in Move.

News Corp CEO Robert Thomson told employees Tuesday that the decision to call off the proposed deal would have no impact on employees, according to a memo verified by CNBC. He also asked them to keep quiet about the matter.

“As I advised early in this process, it is best not to speculate, and so if you hear from the media, shareholders, customers or others, please notify the communications team at your company,” Thomson wrote.

In October, the companies said they had formed a special committee to review the deal.

A combination of the two companies would have united leadership in Murdoch’s empire and reduced costs while shrinking audiences for both print and television media. News Corp is owned by Dow Jones, publisher of The Wall Street Journal. Fox owns the right-wing networks Fox News and Fox Business, a CNBC competitor, with what’s left of the $71.3 billion sale of Twenty-First Century Fox to Disney in 2019.

Murdoch split the companies in 2013. The Murdoch family trust controls approximately 40% of the voting rights of both companies.

At the time, the thinking behind the reunion would have been to simply give the merged company greater reach to compete at a time when media companies are competing for subscribers and digital advertising spend, CNBC previously reported.

The potential merger had faced opposition in recent months from shareholders who didn’t believe a merger would deliver News Corp’s true value. would show if it merged with Fox.

Some shareholders, such as Independent Franchise Partners, believed that the merger would not have realized News Corp’s full potential value and other alternatives, such as News Corp’s dissolution, should have been considered. The London firm is one of the largest shareholders in both News Corp and Fox, which is not Murdoch.

Irenic Capital Management was another shareholder who pushed back on the proposed merger, saying Fox does not serve News Corp’s strategic goals. Both Irenic and Independent Franchise believe News Corp stock is undervalued. Fox Class A shares closed at $32.67 on Tuesday, while News Corp Class A shares closed at $19.53.

– CNBC’s Gabrielle Fonrouge contributed to this article.

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