Most Analysts Think 'Big Uncle Rupert' Will Prevail in Dow Jones Bid

By Saba, Jennifer | Editor & Publisher, June 1, 2007 | Go to article overview

Most Analysts Think 'Big Uncle Rupert' Will Prevail in Dow Jones Bid


Saba, Jennifer, Editor & Publisher


It's tough to walk away from $5 billion -- at least that is the prevailing wisdom on Wall Street regarding the latest twist on Rupert Murdoch's offer to take Dow Jones off the hands of the Bancroft family.

Last night's news that the Bancrofts were willing to meet with Murdoch after his repeated pleas in addition to the statement the company planned to explore strategic options gives Murdoch an advantage.

"I think a deal will get done," said Alexia Quadrani, an analyst with Bear Stearns. "It's too rich of an offer and the industry is just too challenged right now." She says any number of circumstances could have persuaded the family to meet with Murdoch including Dow Jones largest outside shareholder T. Rowe Price, which agitated for the deal earlier this week.

"I'm not surprised," observed Prudential Equity research analyst Steven Barlow. "Murdoch usually wins. The family needs to have conversations with him."

Newspaper analyst John Morton, however, doesn't believe Murdoch's success is a foregone conclusion. "It's conceivable that part of the Bancroft family that has resisted the bid wants to do things to soothe those members of the family that do want something to happen," Morton explained. "Having a meeting with Murdoch is one way to do that."

But Barlow thinks it's highly unlikely that a white knight investor will swoop in and make a better offer. "No one else is going to pay $60 [per share] -- a fair price," he said. "Could Murdoch pay $65? Sure. It's no big deal for Murdoch." If Dow Jones goes for $65, Barlow said it would represent a multiple of 18 times 2007 estimated EBITDA.

The Thompson/Reuters merger may be another reason the Bancrofts have reconsidered the proposition. When Murdoch first made the offer in May, slightly more than 50% of the family said they would vote down the deal. …

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