Continuing Coverage of the Dow Jones Story
In a move that shouldn't be surprising, UBS downgraded Dow Jones (DJ) from Neutral to reduce. The key reason given was that it's no longer certain whether a deal will go through.
UBS said that they are "unconvinced that takeover bids will rise above $60 per share." This is a legitimate concern. The bid by Murdoch for the company is so high that others like Microsoft (MSFT) said that entering into the process makes no economic sense - and they're right.
The smartest people in connection to this are probably Fidelity Management and Research, which recently sold their shares in the company at a hefty profit. I don't see Murdoch or anybody else upping the ante for the company. The offer is already at a premium far beyond what could be expected.
There is more pressure here on the Bancroft family than meets the eye or is being published. If a deal isn't made, what will happen afterwards? If they could have 
received $60 a share, and things collapse, it'll plunge to pre-bid prices somewhere in the mid-30s. If I were a shareholder in it, I would have taken my money and ran like Fidelity did.
But if the offer is rejected, what will be the response from other shareholders? Will there be legal repercussions?
I think the market is starting to understand that this stock isn't going to go above $60 a share. It seems that there was hope that another suitor was going to swoop in and make a higher bid - that's very doubtful.
I don't think Murdoch will make a higher bid either. Why should he? Of course it depends on how badly he wants the company, but I think he built that into the original bid to begin with. He knew exactly the price to offer to pretty much eliminate the competition and make it a negotiation between him and the Bancroft family. The ball is now in their court.
No matter what happens, the bid has revealed the soft underbelly of the company, and changes will have to be made whether Murdoch gets it or not.
Related Coverage:
Bancrofts Said to be Readying Proposal for Special Board
Another Dow Jones Suitor Bites the Dust
More Suitors for Dow Jones than Men Saying They were Father of Anna Nicole Smith's Baby
Brian Tierney Interested in Dow Jones
Union for Dow Jones Employees Claims Ron Burkle Joined Them to Battle Rupert Murdoch
Journalists Threaten to Walk Out if Murdoch Gets Dow Jones: Who Cares?
Why the Bancrofts Need to Sell Dow Jones & Company
Murdoch Family, Meet the Bancrofts!
Dow Jones & CO.'s Controlling Family to Meet with Rupert Murdoch
Battle for Control of Dow Jones may Eventually become a War
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» Dow Jones Downgraded by UBS: Deal may not go Through from BizzBites.com
In move that shouldn't be surprising, UBS downgraded Dow Jones from Neutral to reduce. The key reason given was that it's no longer certain whether a deal will come about. [Read More]
Tracked on: June 14, 2007 4:04 PM | Permalink to Trackback