NEW YORK - Large shareholders in News Corp applauded Rupert Murdoch's decision to withdraw a proposal to reunite Dow Jones and Fox Corp, as News Corp decided to pursue a sale of Move Inc instead.
The company said on Tuesday that News Corp is in talks to sell Move, which operates the Realtor.com website, to CoStar Group.
On Wednesday afternoon, News Corp shares were up over 5%, compared to earlier gains, as shareholders praised the decision to abandon the deal with Fox to sell Move at a significant premium to what News Corp first paid for the company it bought in 2014.
In 2014, News Corp bought Move for about $1 billion. It is in talks to sell the stake in Move for more than $3 billion, according to Reuters.
Since the move to renuite Fox and News Corp was first announced in October last year, a number of large shareholders on both sides opposed the deal.
T. Rowe Price, the biggest investor in News Corp with a roughly 12% stake, previously expressed concerns that the deal would undervalue News Corp. On Wednesday, Vincent DeAugustino cheered News Corp's decision to scrap the deal.
He said that News Corp considered other options to unlock value and that we applaud the decision to forgo such a transaction.
On Tuesday, activist investment firm Irenic Capital, who opposed the proposed reunion of Fox and News Corp, applauded the decision to not move forward.
Cowen Co's Doug Creutz said investors were pleased by the decision to walk away from a potential combination, saying that pressure from investors like T Rowe Price weighed on the decision to pursue the deal.
A rally in News Corp shares in recent weeks meant Fox would have to pay a premium for the merger to be agreed, something that the Murdochs did not believe they could justify to shareholders. Fox shares were up about 2% on Wednesday.
While News Corp's decision to sell Move has been positively received, questions remain on the future of the company's non-media assets, including its stake in Australian real estate company REA Group Ltd.
What is the other big question is if News Corp gives their shareholders their pro-rata shares of REA in addition to selling Move? Craig Huber, media analyst at Huber Research, said that the company's real estate holdings would be cleaned out and the structure of News Corp would be simplified as the company is overly complicated.