By: E&P Staff
A Bancroft family representative’s assertion that family members holding “slightly more than” a 50% stake in Dow Jones opposed Rupert Murdoch’s surprise — and lucrative — bid for the company failed to tamp investor and industry sentiment Tuesday that the financial information giant is in play.
Dow Jones flagship The Wall Street Journal reported Tuesday that Reuters is interested in buying parts of the company, including Dow Jones Newswires, and Dow Jones Indexes, which produces not only the famous Dow Jones Industrial Index, but indexes and market indicators for bourses around the world.
The report, citing “a person familiar with the matter,” was in the Journal’s influential “Heard on the Street” column by Susan Pulliam, Gregory Zuckerman, and Karen Richardson.
Also Tuesday, Wachovia Securities downgraded Dow Jones stock (NYSE: DJ) to “market perform” from “outperform.”
The downgrade is not surprising, given that Dow Jones stock leaped 55% on news of the offer by Murdoch’s News Corporation. The cash or combination of cash and News Corp. stock offer is valued at $5 billion, or $60 a share — a premium of 67% on than the stock’s price recently.
“Based on the ability for News Corp. to leverage Dow Jones’ content and valuation of the deal, while possible, we don’t think a competing bid above the $60 level will emerge,” Wachovia said in a letter to client.
In a front-page article on the surprise offer, the Journal noted a “longstanding Wall Street perception” that any offer for Dow Jones would have to at least equal the so-called “Hammer price,” named after the Bancroft family’s former lawyer Roy Hammer.
“That price is $60 a share, according to one Wall Street banker familiar with past discussions,” the article by Dennis K. Berman and Sarah Ellison said.
Wachovia said the acquisition would be a boon to News Corp., giving it “immediate credibility” for its Fox Business News Channel, which launches in the fall.
At least one financial information company took itself out of the running for Dow Jones. GE, owner of the CNBC cable channel, isn’t interested, CEO Jeffrey Immelt told the Journal: “It’s too difficult a time for the industry.” Bloomberg also said through a spokesperson that is not interested “at this time.”