Rupert Murdoch’s 21st Century Fox (FOXA:US) Inc. slumped in Sydney trading after announcing plans to delist its Australian stock to boost its liquidity on the Nasdaq market.
The shares dropped 4.7 percent to A$36.31 at the close of trade. 21st Century Fox, based in New York, plans to ask shareholders to approve the move at a special meeting in March or April and a delisting may be completed by June, the company said in a statement yesterday.
Murdoch, 82, started his media empire in Australia after inheriting regional publishing assets from his father before shifting his focus overseas to tap new growth. Removing Australian traded shares may prompt domestic institutional investors to exit the stock, according to Peter Esho, chief market analyst at Invast Financial Services Pty. in Sydney.
“A lot of institutions are mandated to only hold Aussie stocks so they have to get out and buy something else,” Esho said. “It’s a no-brainer, they have to just take profits and get out.”
Exiting the Australian exchange (FOXA:US) would simplify the media company’s capital structure and increase the liquidity of its stock, Fox said. Holders of shares listed in Australia will be able to switch to the company’s Nasdaq-listed stock, it said.
The change may allow Murdoch and his family to vote more of their 39.4 percent voting stake (FOX:US), according to a person with knowledge of the decision, as some Australian institutions divest the stock from their funds.
Murdoch became a U.S. citizen in 1985 as he sought to add television stations and in 2004 moved the media company to the U.S. where it controls cable channels, a Hollywood studio and TV network.
The U.S. Federal Communications Commission limits television station owners such as Fox to less than 25 percent foreign control. To comply, Fox suspends some voting rights for non-U.S. stockholders. The Murdoch family trust agreed to limit its voting stake to be proportional.
“Clearly this news is a short-term negative on Fox given the creation of an overhang on the stock,” Andrew Levy, an analyst at Macquarie Group Ltd., said in a note to clients. “Longer-term, we still like the growth opportunity available to Fox and are comfortable with its underlying valuation.”
Julie Henderson, a spokeswoman for Fox, declined to comment.
Fox, the owner of Fox broadcasting and cable channels F/X and Fox News, split from Murdoch’s News Corp. (NWSA:US) publishing business last year.
Today’s share decline is the biggest since at least June, when Fox and News Corp. began trading as separate stocks.
The Australian TV operations stayed with News Corp., leaving Fox with only a small portion of its revenue and employees in the country. News Corp., which also owns Australia’s largest newspaper business, will remain listed in the country, the company said in a separate statement.
Today’s Australian closing price is about 3.5 percent below yesterday’s closing price in New York, where the stock fell (FOX:US) 2.6 percent to $33.50. The non-voting Class A shares advanced 56 percent in 2013. Murdoch, who is chairman and chief executive officer, and his family own about 315 million Class B shares, (FOXA:US) giving them effective control of the company.
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