NEW YORK—Shares of Wall Street Journal publisher Dow Jones & Co. jumped above News Corp.'s $60-a-share bid for the first time on Friday as investors bet a better offer could emerge.
The stock rose 15 percent after the Bancroft family, which holds 64 percent of voting power in Dow Jones, said late on Thursday that it would consider News Corp.'s $5 billion bid, as well as other offers.
The statement raised expectations that News Corp. Chairman and Chief Executive Rupert Murdoch might sweeten his offer to clinch the deal quickly.
"We as Dow Jones shareholders would be very happy to take the $60, but at the end of the day, my best guess is the $64 to $65 area, just to make everybody happy," said Larry Haverty, associate portfolio manager at Gamco Investors Inc., which owned a $46.8 million stake in Dow Jones and a $352.8 million stake in News Corp. as of March 31.
Earlier, Wall Street analysts said Murdoch could increase his bid to $70 a share or more, which would approach Dow Jones stock's all-time high of $77.31 on June 20, 2000.
But options markets activity suggested the market is projecting the buyout price will land in the mid-$60s.
"As a result of this speculation, DJ June $65 calls with strike prices $5 above the current offer are very active," said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.
Lefkowitz said July $65 call options, which give buyers the right to purchase shares at that price in the future, were also active.
About Face
The Bancrofts' latest statement marked a sharp change from their previous outright opposition to a sale to News Corp. The family also said it would seek a commitment from Murdoch to preserve the editorial independence of Dow Jones after a sale.
News Corp.'s offer was a 65 percent premium to the share price before the bid became public last month, a value many outside shareholders found persuasive despite concerns that Murdoch could hurt the Journal's reputation or interfere in news reporting.
Another shareholder, former Dow Jones executive Jim Ottaway Jr. who controls 5.2 percent of voting power, remained unconvinced. He said he was disappointed by the Bancroft family's decision to consider Murdoch's bid and urged the company to find a "more trustworthy" buyer.
Although Dow Jones is profitable, its growth has lagged companies in the larger media world, as its focus until a few years ago was centered on print publishing.
Despite an expansion into digital publishing, Dow Jones is suffering from a slowdown in advertising sales, as advertisers and readers shift their attention to the Internet.
Banking sources not involved in the process said Dow Jones was most likely to go to Murdoch and did not see rivals bidding higher, or a leveraged buyout.
Besides The Wall Street Journal, Dow Jones publishes investors' newspaper Barron's, news Web site Marketwatch.com, and Dow Jones Newswires, which competes with Reuters Group Plc in publishing financial news.
The proposed Thomson Corp.-Reuters merger also has put pressure on the Bancrofts to sell Dow Jones as the market for financial news and information consolidates.
But analysts question whether other media companies or private equity firms would top Murdoch's offer.
For now, Bloomberg, rumored in the press to be a potential bidder, has ruled out the option. "We are not pursuing acquisitions at this time," a Bloomberg spokeswoman said in an e-mail.
What seems clear, some analysts say, is that Dow Jones' days as an independent company are nearing an end. "It's a done deal that it's going to get sold, and clearly there is more than a 50 percent chance at this point that it will get sold to News Corp.," said Ken Doctor, an analyst with Outsell Inc., a market research company for the publishing industry.
Dow Jones shares climbed to a 6-year high of $61.49, before closing up $7.89 at $61.20 on the New York Stock Exchange. News Corp.'s Class A shares rose 49 cents, or 2.22 percent, to $22.58, also on the NYSE.
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