Why did News Corp scrap its reunion deal with Fox Corp?

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News Corp Scraps Fox Corp Reunion Deal to Pursue Sale of Move Inc.

News Corp decided to withdraw its proposal to reunite with Fox Corp primarily to focus on the sale of its subsidiary, Move Inc. This strategic shift was welcomed by major shareholders who believed the reunion deal undervalued News Corp and that divesting Move Inc at a significant profit offered a better path to unlocking shareholder value. The company is currently in discussions to sell Move Inc, which operates Realtor.com, to CoStar Group.
Shareholder Opposition to Reunion Proposal

Significant shareholders in News Corp had voiced strong opposition to the proposed reunion with Fox Corp since it was first announced in October. T. Rowe Price, News Corp's largest investor holding approximately 12% of the company's stock, had previously expressed concerns that the deal would undervalue News Corp. Activist investment firm Irenic Capital also opposed the reunion. These shareholder concerns reportedly contributed to the decision to abandon the merger talks.
Strategic Pivot to Move Inc Sale

Instead of pursuing the merger with Fox Corp, News Corp is now prioritizing the sale of Move Inc. The company is reportedly in talks with CoStar Group for this divestiture. This move is seen as a way to generate substantial returns for shareholders, as News Corp acquired Move Inc for about US$1 billion in 2014 and is now in discussions to sell it for over US$3 billion.
Market Reaction and Shareholder Approval

The decision to abandon the reunion deal and focus on the Move Inc sale was met with positive reception from the market and News Corp investors. Following the announcement, News Corp shares saw an increase of over 5%. Shareholders, including T. Rowe Price, applauded the company's decision to explore other options to unlock value, such as the sale of Move Inc at a significant premium.
Financial Considerations and Merger Premiums

A recent rally in News Corp shares meant that Fox Corp would have had to offer a substantial premium for the merger to be financially justifiable to News Corp's shareholders. The Murdochs reportedly did not believe they could adequately justify such a premium, further influencing the decision to scrap the reunion proposal. This financial dynamic, coupled with investor pressure, played a role in News Corp's strategic reassessment.

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Why did News Corp scrap its reunion deal with Fox Corp?

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