Rupert Murdoch’s News Corp. on Monday said it would take full control of its Fox Entertainment Group Inc. unit in a stock swap worth about $6 billion, which it said would simplify the media conglomerate’s structure.
The deal, which sent Fox shares up 10 percent, gives News Corp. full ownership of its U.S. entertainment assets such as 20th Century Fox film studios, Fox Network, Fox News Channel and its stake in satellite broadcaster DirecTV, which could make it easier for Murdoch to pursue acquisitions.
The company originally sold an 18.6 percent stake in Fox Entertainment in an initial public offering in late 1998 as a way for U.S. institutional shareholders forbidden from buying shares of a foreign company to invest in a U.S.-based, News Corp.-controlled property.
With the reincorporation of News Corp. in the United States late last year, it made little sense to maintain two publicly traded U.S. entities, executives told analysts in a morning conference.
"Since the reincorporating of News Corp. in the U.S., the logic for Fox no longer exists," David DeVoe, News Corp chief financial officer, told the analysts. "We really took Fox public as a way to drive value into the stock."
But he cautioned, "The operational benefits are limited." The company already controls Fox and expects to see operational cost savings of about $3 million to $7 million.
Analysts said it c
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