GLOBAL - ABP, USS and a host of other US and Australian pension funds are suing News Corporation for extending defences to hostile takeovers without shareholder approval.
Institutional investors approved the reincorporation of News Corp in Delaware late last year, on the condition that poison pill provisions would only last one year.
In August, News Corp unilaterally announced it was to extend the poison pill provisions for a further two years from 8 November, 2005.
A poison pill works as a defence to a hostile takeover, triggering certain provisions upon the commencement of a takeover attempt.
Such measures can involve the issuance of new preferred shares that carry severe redemption provisions that act as a disincentive to a takeover by diluting the value of some shareholders’ stakes and increasing the cost of the takeover.
The Murdoch family owns a 30% stake in News Corp.
Stuart Grant, lead trial counsel for the investor group, said: “This case is about a promise broken - plain and simple.
“The officers and directors of News Corp made a pledge to shareholders that if they gave up the substantial protections of Australian corporate law for the risks inherent in being shareholders of a Delaware corporation, the company would not adopt a poison pill plan lasting more than one year without express shareholder approval.”
Investors in the suit include the Connecticut Retirement Plans and Trust Funds and the Board of Trustees of the Clinton Township Police and Fire Retirement System, plus non-US institutional holders of News Corp stock, including Australian superannuation funds, UniSuper, the Public Sector Superannuation Scheme Board, Commonwealth Superannuation Scheme Board, United Super, Motor Trades Association of Australia Superannuation Fund, H.E.S.T. Australia, and CARE Super Pty.
Other participating foreign institutional investors include Hermes Assured, the Universities Superannuation Scheme and ABP.
The suit was filed in Delaware Chancery Court, the law firm said, seeking to enjoin the extension of the poison pill until News Corp puts the provision to a shareholder vote, as promised.
News Corp was unavailable for comment on deadline.
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