March 17, 2011 - 11:38AM
The board of News Corp has been sued by shareholders for agreeing to buy a business owned by chairman Rupert Murdoch's daughter for about $US675 million.
A trustee for several retirement funds said the board of News Corp approved the "unfairly" priced deal without questioning or challenging the elder Murdoch, who founded the company and is also chief executive.
News Corp spokeswoman Teri Everett described the suit as "meritless".
The chairman of News Corp said he expected his daughter Elisabeth to join his company's board after buying her Shine Group television production business.
The acquisition still needs approval by News Corp's audit committee and the approval of each companies' respective boards. It also requires an independent fairness opinion.
The deal raised new questions about succession at News Corp, which owns the broadcaster Fox and publishes the Wall Street Journal.
"In short, Murdoch is causing News Corp to pay $US675 million for nepotism," said the lawsuit, which was filed overnight in Delaware's Chancery Court.
"In addition to larding the executive ranks of the company with his offspring, Murdoch constantly engages in transactions designed to benefit family members," said the lawsuit by Amalgamated Bank, a trustee for several investment funds holding more than 1 million News Corp shares.
The lawsuit also was joined by the Central Laborers Pension Fund.
The lawsuit seeks damages and a declaration the board breached their fiduciary duty to shareholders.
The case is Amalgamated Bank et al v K. Rupert Murdoch et al, Delaware Chancery Court, No. 6285.
Reuters
