Time Warner Inc. (TWX) Amends Bylaws to Prevent Takeover by Twenty-First Century Fox Inc (FOX)

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Jeffrey Jacobovitz, Arnall Golden Gregory attorney, and Jeffrey Sonnenfeld of Yale School of Management, discussed, on CNBC’s Media Money, Time Warner Inc. (NYSE:TWX)’s move to block shareholders from calling a special meeting in order to thwart Twenty-First Century Fox Inc (NASDAQ:FOX)’s takeover bid.

Time Warner

Jeffrey Sonnenfeld considers that from a corporate governance perspective, what Time Warner Inc. (NYSE:TWX) did was a good idea. “It slows down some of the frenzy of this deal and basically there is a provision that they had in their bylaws,” he said. However, there are bylaws which require annual re-election. This makes Time Warner Inc. (NYSE:TWX) a little vulnerable as they don’t have staggered votes.

So, there is the option to turn this board over next June if the need arises. But Sonnenfeld thinks that this move by Time Warner Inc. (NYSE:TWX) will prevent any kind of pre-empt of panic and misinformation that might confuse people. There existed a lot of confusion, especially among analysts when they talk about 75% overlap of shareholders. This move, Sonnenfeld believed, will give them time to disentangle and realize that those people with the 75% overlap are 4 – 5 times ownership of Twenty-First Century Fox Inc (NASDAQ:FOX) and not Time Warner Inc. (NYSE:TWX).

“What happens frequently with hostile takeovers is there are blocking actions by the board and what it also gives them besides the time is the ability to try to negotiate a higher price from Fox and that’s what they will probably attempt to do,” Jeffrey Jacobovitz said.

He further added that from an entirely trust perspective, this happens frequently and it really does not affect the authorities all that much in terms their overview from that perspective.

“The important question is whether they are acting in the fiduciary duty towards shareholders and if they are trying to negotiate a higher price, arguably if it ever ends up in a court of law, then that would be their argument,” said Jacobovitz.


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