News Corporation is being sued by two of its shareholders who claim Rupert Murdoch is treating the business like a “family candy store” in his decision to buy daughter Elisabeth’s television production company.
The Amalgamated Bank of New York and the Central Labourers Pension Fund have filed a writ in the chancery court of Delaware claiming there was no reason to purchase Elisabeth Murdoch’s Shine Group, except to reward her and maintain the family’s involvement in senior News Corp management, British media reported.
News Corp announced in late February it had reached an agreement-in-principle to acquire Shine for an enterprise value of STG415 million ($A686.46 million).
The deal would see Ms Murdoch join the board of News Corp, her father said at the time of the company’s announcement.
Ms Murdoch is set to receive some STG198 million ($A327.52 million) for her 53 per cent stake in Shine, which is best known for its shows Gladiators and MasterChef.
“In addition to larding the executive ranks of the company with his offspring, Murdoch constantly engages in transactions designed to benefit family members,” says the writ according to Britain’s The Daily Telegraph newspaper.
The claim further alleges that News Corp has over-valued Shine in an assessment conducted by a four-member audit committee “lacking in independence”.
“Throughout his tenure, Murdoch has treated News Corp like a wholly-owned family candy store,” the claim reads.
On the platforms of price and process the transaction “violates the entire fairness standard”, it says.
“Once the prodigal daughter is back into the News Corp fold she will vie with her brothers, board members James Murdoch and Lachlan Murdoch, for the position of successor to Rupert Murdoch’s global media dynasty,” a snippet from the claim published by The Independent newspaper reads.
A News Corp spokesman told The Telegraph: “We believe this case has no merit. Shine is a good fit”.