NEW YORK – News Corp. (NWS) Monday said it would buy the remaining 18 percent of its Fox Entertainment Group Inc. (FOX) unit in a stock swap worth roughly $6 billion, which analysts said would simplify the media conglomerate's structure.
The deal gives News Corp. full ownership of its U.S. entertainment assets such as 20th Century Fox film studios, Fox Network, Fox News Channel and its stake in satellite broadcaster DirecTV, which could make it easier for Rupert Murdoch to pursue acquisitions.
"He has one currency now, it makes life simpler," said Mario Gabelli, fund manager of Gabelli Asset Management.
News Corp. is the parent company of the Fox News Channel, which operates FOXNews.com.
Holders of Fox Class A shares will receive 1.90 shares of News Corp. Class A shares, representing a premium of about 7.4 percent over Fox's closing price Friday of $31.22 on the New York Stock Exchange (search).
News Corp., which was recently reincorporated in the United States, currently holds about 82 percent of the equity and 97 percent of the voting power of Fox.
The transaction comes after Liberty Media Corp. (L) Chairman John Malone raised his voting stake in News Corp. to 18 percent, and News Corp enacted a poison pill provision to make a hostile takeover prohibitively expensive.
News Corp. originally sold an 18.6 percent stake in Fox Entertainment in an initial public offering in late 1998, yielding $2.8 billion at $22.50 a share. At the time, the company, whose other businesses include newspaper, magazine and book publishing as well as cable and satellite television operations in Asia and Europe, said the market undervalued its U.S. media assets.