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Rupert Murdoch withdraws bid to recombine two halves of his empire

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In a major shake-up, Rupert Murdoch and Lachlan Murdoch have decided that the two companies controlled by their family will no longer seek to merge.

News Corp., which owns the Wall Street Journal, the New York Post and other newspapers, and Fox Corp., which oversees Fox News and Fox Sports, said Tuesday night that the media mogul and his eldest son had concluded that the proposed recombination was “not optimal for the shareholders” right now.

The special committees that both companies set up to assess the possible combination have been dissolved. The move came after several shareholders protested the deal.

A Murdoch trust owns about 40 percent of the voting stake in both companies, which shared a governing structure until a scandal over Murdoch tabloid journalists in London hacking into the voicemails of public figures led the family to split them a decade ago concerned that government investigations and civil suits could threaten their entire empire.

But the companies have a structure that gives certain shareholders – particularly Murdoch’s – far more voting power than others, and since the fall they had been exploring a reunion at Rupert Murdoch’s request.

Still, any trade would have required majority approval by the companies’ other investors with voting shares. And discord lurked even within the Murdoch family: Younger son James, who has stepped down from senior roles in the family business but still benefits from the family trust, opposed a merger and wrote letters to both boards in the fall, raising questions about the deal – a move first reported by the New York Times.

Merger talks were also complicated by an expression of interest from an outside firm that wanted to acquire News Corp.’s $3 billion stake in digital real estate firm Move, according to a person familiar with the discussions. Jim Kennedy, a spokesman for News Corp., declined to comment.

At the time of the split in 2013, the elder Murdoch promised it would “enable each company and its division to realize their full potential – unlocking even greater long-term shareholder value.” As recently as 2019, Lachlan Murdoch told Fox investors that the family had no plans to combine the companies. But his father raised the possibility last fall with his older son and various advisers, according to people who have spoken to him and who spoke to The Washington Post on condition of anonymity to discuss private conversations.

In November, Irenic Capital Management, an activist investor, sent a letter to News Corp.’s special committee objecting to the merger. T. Rowe Price, a major shareholder in News Corp., told the New York Times that the proposed recombination would lower the value of the company, which was already trading below what it was worth.

On Tuesday evening, Irenic said it had reviewed a letter from senior Murdoch notifying them of the withdrawal of the proposed combination. Adam Katz, co-founder of Irenic, declared himself “encouraged” by the move.

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