Two small shareholders in News Corp are suing the company for “paying for nepotism” in its $675 million deal to buy Rupert Murdoch’s daughter Elisabeth Murdoch’s production business Shine.
Amalgamated Bank of New York and the Central Laborers Pension Fund filed a lawsuit in a Delaware court alleging that the deal was a case of “nepotism” and that the board of News Corp failed to question or challenge Rupert Murdoch. The deal will see 42-year-old Elisabeth take a seat on the News Corp board.
“In addition to larding the executive ranks of the company with his offspring, Murdoch constantly engages in transactions designed to benefit family members,” said the lawsuit by Amalgamated Bank, a trustee for several investment funds.
The lawsuit accuses Murdoch of treating News Corp “like a wholly owned family candy store” and argues that a fair price was not achieved for Shine.
“Although the transaction makes little or no sense for News Corporation and is far above a price any independent, disinterested party would pay for Shine, it is unsurprising that the transaction was approved by News Corporation’s board,” lawyers for Amalgamated Bank said in the filing.
Amalgamated Bank, a trustee for several investment funds, holds about 1 million shares or 0.003 per cent of News Corp stock. It is understood that this is the third time the bank has taken action against the board in recent years. News Corp said that the lawsuit was “without merit” and added that Shine is a “very attractive business” that fits with the company’s entertainment portfolio.
The acquisition, which was engineered by bank JP Morgan, still needs approval by News Corp’s audit committee and the approval of the two companies’ boards. It also requires an independent fairness opinion.