NEW YORK – Several U.S., Australian and European institutional shareholders Friday said they sued global media conglomerate News Corp. (NWS) for reneging on a promise to seek shareholder approval before extending a poison pill provision.
The suit, brought by a group of shareholders including the U.S.-based Connecticut Retirement Plans and Trust Funds, the Board of Trustees of the Clinton Township of Police and Fire Retirement System, Australia-based UniSuper Ltd., and CARE Super Pty Ltd., was filed in Delaware Chancery Court.
A News Corp. spokesman called the suit "frivolous and without merit."
News Corp. is the parent company of the Fox News Channel, which operates FOXNews.com.
New Corp. enacted emergency preventions against a hostile takeover last year after Liberty Media (L) boosted its voting stake in News Corp. to nearly 20 percent.
Although Liberty Media chairman John Malone (search) has publicly declared his loyalty to News Corp.'s controlling Murdoch family and struck down speculation of a takeover, News Corp. has extended takeover prevention provisions for another two years.
Malone and News Corp. Chairman and CEO Rupert Murdoch (search) have been in talks since last year but have been unable to reach an accord over Malone's stake.
Shareholders represented in the suit, which include one of the funds managed by Hermes Investment Management, Ltd., said News Corp. had promised shareholders last fall it would seek shareholder approval before extending the terms of the pill as a condition for the approval of News Corp.'s plans to reincorporate as a U.S. company.
"Shareholders considered these assurances necessary before agreeing to reincorporation because Australian corporate law generally provides greater protections for shareholders than Delaware corporate law," the shareholders said in a joint statement.
This year, News Corp.'s board of directors agreed to extend the provision by another two years.
Others named in the suit include Rupert Murdoch, his son Lachlan Murdoch, and Peter Chernin, News Corp. chief operating officer.