Exclusive: Top Fox investors seek to convert voting shares, Murdoch may benefit

Sat Feb 7, 2015 9:30am EST
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By Nadia Damouni and Liana B. Baker

NEW YORK (Reuters) - Several top investors in Twenty-First Century Fox Inc are pressing for the right to swap their voting shares for ordinary shares, which are trading at an unusual premium, even though the move could hand even more control of the company to Rupert Murdoch, according to people familiar with the matter.

Fox's dual-class share structure already gives the 83-year-old media mogul control over 39.7 percent of voting rights, even though he and his family hold only a 12 percent equity stake.

Several Fox investors, which collectively own 8 percent of voting rights, have been unhappy about the relative performance of their shares since the company delisted from the Australian stock exchange last May, the people said.

Historically, the voting shares had traded at a premium. In the five years before the delisting, the Class B shares, which carry voting rights, traded at an average premium of 6.2 percent over the ordinary Class A shares. But the delisting caused some Australian institutional funds to sell their B shares, which now trade at a 3 percent discount to the A shares.

Frustrated with the gap, several top Fox shareholders have met with management in recent months to press for amendments to the company's charter to allow voting shares to be convertible into ordinary shares, according to the people, who requested anonymity as the discussions are private.

They said the investors, which include major hedge funds, believe conversion rights would push up the value of the B shares, pointing to CBS Corp and Comcast Corp as examples. The voting shares of both companies can be converted and they trade at a premium to ordinary shares.

Some of the Fox investors plan to take their proposals to the next annual general meeting, expected in the fall, said the sources familiar with the matter. Changing Fox's charter would require approval from a majority of shareholders with voting rights.

It is unclear how much support there would be for this campaign. A Fox spokesman declined to comment.   Continued...

Rupert Murdoch, Executive Chairman News Corp and Chairman and CEO 21st Century Fox speaks at the WSJD Live conference in Laguna Beach, California in this file photo from October 29, 2014. REUTERS/Lucy Nicholson/Files