Dow Jones & Co Inc.could face a flood of shareholder lawsuits if it rejects a buyout bid from Rupert Murdoch and its shares tumble, legal and governance experts said on Wednesday.
Dow Jones, publisher of the Wall Street Journal, has said it is evaluating the $5 billion takeover bid from Murdoch’s News Corp. a proposal that triggered a nearly 55 percent jump in its stock price on Tuesday.
But a representative of the publisher’s controlling shareholders, the Bancroft family, said they would oppose it.
If the board ultimately rejects the offer — and no comparable bids emerge — lawsuits almost surely will be filed accusing the directors for failing to look after investors’ interests, said Thomas Dewey, a partner at law firm Dewey Pegno & Kramarsky.
“There is a substantial litigation risk,” said Dewey, who specializes in governance and securities law matters. “As a practical matter, it will be difficult for them (the board of directors) not to deal with Mr. Murdoch, both from a legal perspective and a market perspective.”
Dow Jones’ board was set to meet on Wednesday to discuss Murdoch’s bid, a person familiar with the situation told Reuters. No decision was expected at the meeting, with the board instead likely to review the offer, discuss the valuation and the potential for other bids to emerge, this person said.