Does a bid for Dow Jones implicate Revlon duties? Can a board “just say no”? What if the Board says nothing, b/c they know a majority of their s/h will not vote for the acquisition? This is the stuff good Corporations or M&A exam questions are made of. Luckily, counsel to the Dow Jones Board must have paid attention in class:Â
DOW JONES STATEMENT
Dow Jones & Company today announced that a director who is a representative of the Bancroft family, Michael B. Elefante, informed the Dow Jones Board of Directors today that members of the family and the trustees of trusts for their benefit have advised him that they would vote shares constituting approximately 52% of the outstanding voting power of Dow Jones as of May 1 (excluding options) against the proposal submitted by News Corporation to acquire Dow Jones. Approval of a merger under Delaware law requires approval of a majority of the outstanding voting power of the corporation. Accordingly, the Dow Jones Board of Directors has determined to take no action with respect to the proposal.
The 52% family block takes the DJ Board off the hook for now, for purposes of this particular proposal. What happens if the water starts churning with hungry bidders? At what point does the Board need to say to the 52% block “you are walking away from a super deal”? Does the Board ever need to say that? What about the minority s/h? Who, if anyone, needs to advocate for them? Stay tuned.