DealLawyers.com Blog

April 12, 2006

News Corp. Settles Poison Pill Lawsuit

From an ISS article: Media giant News Corp. and an international group of institutional shareholders have settled a lawsuit concerning the company’s poison pill takeover defense, according to an April 6 announcement by lawyers representing the shareholders.

The investors’ suit, filed in October by U.S., European, and Australian pension funds, including the Connecticut Retirement Plans and Trust Funds and the Australian Council of Super Investors (ACSI), argued that the media company broke a promise to shareholders when it decided in August 2005 to extend its poison pill for another two years. In 2004, management, seeking shareholder approval to incorporate in Delaware, pledged that the company would refrain from activating a pill for more than 12 months without the prior approval of shareholders.

The settlement averts a trial in Delaware Chancery Court that was to start April 24. Under the accord, News Corp. will put a management proposal on the ballot at its October annual meeting to extend the pill by two years. That proposal would also allow management to extend the pill by an additional year, but only if necessary to address concerns over moves by Liberty Media to acquire a controlling interest in News Corp. The company has said the pill was extended without shareholder approval to ward off the possibility of a hostile takeover by Liberty.

Lawyers representing the investor plaintiffs also said the proposal would give shareholders the “right to vote on subsequent poison pill provisions for the next 20 years.”