Investment firm Southeastern Asset Management Inc. acquires 12% voting stake in News Corp., largest stake behind Chairman Rupert Murdoch

NEW YORK , September 11, 2013 () – Southeastern Asset Management Inc., the investment firm that joined Carl Icahn in opposing Dell Inc.’s buyout, acquired a 12 percent voting stake in News Corp., the largest holding behind Chairman Rupert Murdoch.

The 23.8 million-share Class B stake, disclosed in a regulatory filing yesterday, is valued at about $397 million, based on a closing price of $16.72. The investment accounts for about a 4.1 percent economic interest in New York-based News Corp., the publishing business split off in June from Murdoch’s film and television division.

Southeastern, led by Chairman and Chief Executive Officer O. Mason Hawkins, has no plans to influence News Corp., according to the filing. The investment company, based in Memphis, Tennessee, is known for value investing, though it has occasionally tried to sway management. Hawkins and Icahn dropped their opposition this week to Michael Dell’s $24.9 billion plan to buy out Dell.

Lee Harper, a spokesman for Southeastern, didn’t respond to an e-mail sent outside normal business hours yesterday.

Ashley Huston, a spokeswoman for News Corp., declined to comment. The New York-based company owns the Wall Street Journal and the New York Post, among other publications.

Southeastern, founded in 1975, is an independent advisory firm with $32.9 billion under management as of June 30, according to its website. The company, which manages Longleaf Partner Funds, generally takes large stakes in “competitively entrenched, well-managed businesses purchased at steep discounts to their intrinsic values.”


Value Investor


Its biggest holdings at the end of the second quarter included Chesapeake Energy Corp., holding company Loews Corp., delivery company FedEx Corp. and satellite broadcaster DirecTV.

Murdoch, 82, split his two media companies following a hacking scandal at its U.K. newspaper unit. News Corp. shut down the weekly News of the World and Murdoch and his son, James, who oversaw the division, testified before Parliament in 2011 about the company’s response to revelations that reporters accessed voice mail accounts, including that of a murdered school girl named Milly Dowler.

In July, Murdoch agreed to testify to Parliament a second time. British lawmakers asked for Murdoch to be recalled after the transcript of a tape was published by Exaro News, in which Murdoch told reporters at the Sun newspaper that bribery had been a routine practice.


Shareholder Unrest


The scandal intensified concerns among some shareholders about News Corp.’s governance. Proposals to separate the chairman and CEO titles held by Murdoch and to eliminate the dual-class stock system that allows Murdoch and his family to retain control drew opposition at News Corp.’s annual meeting last October. Investors excluding family holdings voted in support of the two measures, even as Murdoch pressed forward with a plan to split the company.

Murdoch holds about 39 percent of News Corp.’s voting stock, or a 14 percent economic interest. Saudi Prince Alwaleed Bin Talal owns 6.6 percent of the voting shares, based on data compiled by Bloomberg, and supported him through the hacking episode.

News Corp. competes with Bloomberg LP, owner of Bloomberg News, in financial news and data.

Southeastern previously teamed with Icahn in a shareholder revolt at Chesapeake Energy. Hawkins, 65, also joined with investors advocating for a sale of Knight Ridder Inc. in 2005.


‘Grossly Undervalued’


Class B shares of News Corp. added 1.4 percent yesterday in New York. The more widely traded non-voting Class A stock advanced 1.4 percent to $16.56, bringing its gain to 4.8 percent since the company was spun off.

In dropping his battle for control of Dell, in which he was joined by Southeastern’s Hawkins in a counterbid, Icahn argued the company was worth more. Southeastern sent a letter to Dell’s board in February saying Dell “grossly undervalued” the computer maker.

While they failed to win their prize, Icahn and Southeastern took credit for obtaining a sweetened offer from Dell and Silver Lake Management LLC.

“We are pleased that our efforts contributed to the modest increase in merger consideration Dell stockholders will receive,” Southeastern said in a Sept. 9 statement.

Dell and Silver Lake have the votes to win approval of their proposed leveraged buyout, a person with knowledge of the matter said yesterday.




--Editors: Anthony Palazzo, Terje Langeland


To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net


To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.