By: E&P Staff
The News-Journal Corp. will have to pay Cox Enterprises $129 million for its shares or face the possibility of selling its paper The Daytona Beach (Fla.) News-Journal.
A federal appeals court in Atlanta struck down the News-Journal Corp.’s challenge over the value of Cox’s 47.5% stake in the company, reports Jay Stapleton a staff writer at the News-Journal. Cox is the minority owner of the News-Journal Corp., controlled by the Davidson family.
In May 2004 Cox sued the News-Journal Corp., according to court documents, for “fraud, waste, and mismanagement” relating to a $13 million bill for naming rights of a Daytona Beach downtown performing arts center with ties to the Davidson family.
Cox claimed in court filings that it was never made aware that the company sanctioned the move to spend the money for a sponsorship that was “more than the [News-Journal Corp.’s] annual net income for the prior two years combined,” court documents revealed.
The lawsuit triggered an “election to purchase” statue. Under Florida law, the News-Journal Corp. can buy the shares of the complaining shareholder at “fair value” determined by the judge.
Cox claimed its stake was worth $129 million while the News-Journal Corp. alleged it was valued at $29.4 million.
The United States District Court in Orlando found in Cox’s favor. The News-Journal Corp. appealed.
Now the News-Journal Corp. has the option of a making several payments to Cox, one $29 million payment within 10 days followed by yearly payments of $20 million, Stapleton reported.
If it does not pay Cox within 10 days, the company will have to put itself up for auction. By doing so it will flush out potential buyers.
Clark Furlow, a law professor with Stetson University College of Law, told Stapleton the News-Journal Corp., Cox or any third party could make an offer for the entire company.