News Corporation (NWS) Shares Tip

News Corporation (NWS) has a retained Outperform rating and is trading well below Macquarie Research Equities (MRE) estimate of its true sum of parts value. The sum of the parts FY07 valuation would rise to A$32.28–37.72 per ordinary share, and A$30.94-36.15 per preference share. A deal between News Corporation and Liberty Media appears imminent, potentially involving a swap of the Liberty shareholding for NWS's 39% holding in DirecTV, cash and some other small assets. Liberty Media currently holds a 19.1% interest in the ordinary voting shares (B-stock) and 14.8% interest in the preference non-voting shares (A-stock) of News Corporation. In total, this equates to 512.6m shares (or around 16.1% of the total number of shares on issue). At overnight closing prices of NWS and NWS/A in the US, this values the total Liberty shareholding at US$11.2bn. The prospective deal appears to be taking the form of a swap of the Liberty shareholding for: 1) The NWS holding of 39% in DirecTV (valued at $11.2bn); 2) cash of ~US$550m; and 3) some 'other small assets'. Together, it appears the total consideration being offered to Malone/Liberty for their NWS shareholding is in the order of US$11.8bn. At exit consideration of US$11.8bn, Liberty would be divesting its NWS holding at a 5.75% premium to the current on-market value of the holding. Effectively, this deal would amount to a one-stop share buyback, with the repurchase (and cancellation) of 512.6m (out of 3,176m, or 16.1%) of the total number of NWS shares on issue (ords and prefs) – and what's more, it would happen on a rapid timeline. MRE estimate that the potential deal could be up to 3.2% accretive this year, and 9.5% accretive in the first full year of the transaction.

News Corporation Limited is listed on the Australian Stock Exchange (ASX) under stock code NWS. In November 2004, The News Corporation Limited underwent a reorganisation and redomiciled in the United States. That company's securities ceased trading under the ASX codes NCP and NCPDP on 3 November 2004 and commenced trading the following day as an American company under the new name News Corporation, Inc. Securities based on those American shares still trade on ASX, as Chess Depository Interests under the codes NWS and NWSLV. For any announcement in relation to the former Australian company (The News Corporation Limited) please use the code NCP. For any subsequent announcement by the American-based News Corporation, Inc. please use the code NWS. You can view their investor website here.NWS was listed on the ASX on 4 November, 2004. News Corporation is a Diversified international media and entertainment company. Rupert Murdoch is the appointed Chairman, Director, Managing Director. Read previous stock recommendation for News Corporation (NWS).Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. Check your charts and good luck with your share trading!