From Day One, Bancroft family members controlling trusts based in Denver wanted Rupert Murdoch and News Corp. to pay a premium for the super-voting shares the family held in Dow Jones & Co., the owner of The Wall Street Journal.
By Tuesday, however, they had backed off, allowing News Corp. to sew up its $5 billion purchase, according to Lynn Hendrix, a partner at Holme Roberts & Owen, the Denver-based law firm that represented the Denver trusts in negotiations.
“In the end, we felt that it was more beneficial to obtain $60 a share than to take the chance that Murdoch would withdraw his offer, which he indicated several times that he would do,” Hendrix said.
The Bancrofts are descendants of Jessie Waldron Barron, the wife of Clarence Barron, who bought Dow Jones in 1902.
Hugh Bancroft Jr., grandson of Jessie Waldron, formed a relationship with the Denver law firm’s namesake J. Churchill Owen in the 1940s.
Although family heirs are not based in Denver, they have maintained the relationship with Holme Roberts & Owen over the years.
Heirs of the Bancroft family retained control of Dow Jones through 20 million Class B shares, which carry 10 votes per share versus one vote available to each of the 64 million common shares.
Super-voting shares in other deals have received a premium, and the Denver trust argued that News Corp. should pay one as well, but Murdoch wouldn’t budge.
When it came time to vote on the deal Monday, the Denver trusts withheld their support, giving Murdoch the backing of family-held shares controlling about 30 percent of the company.
Murdoch wanted at least half of the 20 million family shares in his camp, which allowed the Denver trusts, which control about 9 percent of the company, to play a swing role, Hendrix said.
Blocked in their efforts to get more for the super-voting shares, the Denver trusts played defense so they didn’t receive less than common shareholders.
The way the deal was structured, the Bancrofts would have had to shoulder $30 million of deal expenses that common shareholders didn’t.
In a compromise that Hendrix helped negotiate, News Corp. and Dow Jones picked up those costs, which worked out to $1.50 per family share.
Repeated assurances that the price was fair, along with the fear that Murdoch would kill the deal, swung the Denver trusts in support of the deal.
“We had been told by all our advisers and by other advisers that $60 a share was a magnificent price,” Hendrix said.
Stuart Epstein, Todd Davison and Shawn Fowler of Morgan Stanley were important advisers to the Denver trusts, Hendrix said.
Dow Jones shares had been trading at about $35 before spiking May 1 when the buyout offer at $60 a share became public.
With revenues and earnings under pressure across the publishing world, a sweeter offer became less likely as time passed.
“No other credible offer was forthcoming,” Hendrix said.
Murdoch and News Corp. by Tuesday had lined up family support representing 37 percent of the available votes, including most but not all of the Denver trusts.
Public shareholders are expected to throw their votes behind the deal as well.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
