Liberty Media Corp., the media company controlled by billionaire John Malone, challenged News Corp. (NWSA:US)'s settlement of a shareholder lawsuit over the company's ``poison pill'' takeover defense.
Liberty Media, based in Englewood, Colorado, asked Delaware Chancery Court Judge William B. Chandler III to reject the accord in papers filed on May 12. The settlement, disclosed April 13, would bar shareholders from suing to change poison pill plans, Liberty Media said.
``It is unfair and inequitable for the settlement effectively to target Liberty and put in place a global release that may be read to extinguish Liberty's ability to assert claims,'' Liberty Media lawyers wrote. Chandler plans to hold a hearing on the settlement on May 23 in Georgetown, Delaware.
Poison pills give shareholders rights to buy new shares at a discount, making hostile takeovers prohibitively expensive. News Corp. adopted its poison pill after Liberty Media boosted its voting stake in the New York-based company to 17 percent from 9 percent, posing a challenge to Chairman Rupert Murdoch.
News Corp.'s extension of the pill prompted the suit by shareholders, who claimed the company broke a promise to seek their approval first. The suit will be dismissed if shareholders approve a two-year extension of the existing defense at News Corp.'s annual meeting in October.
``Parties do not have carte blanche to release any claims they wish in a settlement agreement,'' wrote Liberty Media lawyer J. Travis Laster of Abrams & Laster in Wilmington, Delaware.
News Corp.'s Class A shares rose 25 cents to $18.65 in New York Stock Exchange composite trading at 4:24 p.m. They have climbed 20 percent this year. Shares of Liberty Media Holding Corp. rose 77 cents to $80.25 in Nasdaq Stock Market trading, bringing this year's gain to 15 percent.
News Corp. spokesman Andrew Butcher wouldn't immediately comment on the objection. Shareholders' lawyer Stuart Grant, of Grant & Eisenhofer in Wilmington, didn't immediately return calls seeking comment.
As part of the settlement, lawyers from Grant & Eisenhofer will ask Chandler to award them about $1.65 million in legal fees and expenses from News Corp., according to court papers.
Plaintiffs including UniSuper Ltd., a $15 billion Australian retirement fund for college employees, claimed in the suit that Murdoch and other directors reneged on an agreement not to change or extend the poison pill without shareholder approval when they switched News Corp.'s incorporation to Delaware from Australia in 2004.
The case is Unisuper Ltd., et al v. News Corp., CA1699-N, Delaware Chancery Court (Wilmington).
To contact the reporter on this story: Phil Milford in Wilmington, Delaware at email@example.com.
To contact the editor responsible for this story: Patrick Oster in New York. or firstname.lastname@example.org.