The Company’s Amended and Restated Certificate of Incorporation and Amended and Restated By-laws contain certain anti-takeover provisions that may make more difficult or expensive a tender offer, change in control, or takeover attempt that is opposed by the Company’s Board or certain stockholders holding a significant percentage of the voting power of the Company’s outstanding voting stock. In particular, the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws provide for, among other things:
- a dual class common equity capital structure, in which holders of FOX Class A Common Stock can vote only in very specific, limited circumstances;
- a prohibition on stockholders taking any action by written consent without a meeting (unless there are three record holders or fewer);
- special stockholders’ meeting to be called only by a majority of the Board, the Chair or vice or deputy chair, or upon the written request of holders of not less than 20% of the voting power of our outstanding voting stock;
- the requirement that stockholders give the Company advance notice to nominate candidates for election to the Board or to make stockholder proposals at a stockholders’ meeting;
- the requirement of an affirmative vote of at least 65% of the voting power of the Company’s outstanding voting stock to amend or repeal our Amended and Restated By-laws;
- restrictions on the transfer of the Company’s shares; and
- the Board to issue, without stockholder approval, preferred stock and series common stock with such terms as the Board may determine.
These provisions could discourage potential acquisition proposals and could delay or prevent a change in control of the Company, even in the case where a majority of the stockholders may consider such proposals desirable.
In addition, all of the shares of FOX Class A Common Stock and the majority of the shares of FOX Class B Common Stock formerly held by the Murdoch Family Trust have been transferred to LGC Holdco, a Delaware limited liability company owned by certain Murdoch family trusts (collectively, the “LGC Family Trusts”). LGC Holdco beneficially owns less than one percent of the outstanding FOX Class A Common Stock and approximately 38.8% of the FOX Class B Common Stock. The voting and disposition of the shares of FOX Class A Common Stock and FOX Class B Common Stock held by LGC Holdco is, subject to certain limited exceptions, decided solely by a managing director of LGC Holdco’s sole manager who is appointed, and may be replaced, by Lachlan K. Murdoch. As a result, Lachlan K. Murdoch may be deemed the beneficial owner of the shares owned by LGC Holdco. Lachlan K. Murdoch, however, disclaims beneficial ownership of such shares.
This ownership concentration of FOX Class B Common Stock by LGC Holdco and associated concentration of voting power could discourage third parties from making proposals involving an acquisition of the Company. Additionally, such ownership concentration increases the likelihood that proposals submitted for stockholder approval that are supported by LGC Holdco will be adopted and proposals that are not supported
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by LGC Holdco will not be adopted, whether or not such proposals to stockholders are also supported by the other holders of FOX Class B Common Stock. LGC Holdco’s interests may be different from, or conflict with, the interests of the Company’s other stockholders and, as a result, this concentration of ownership may have the effect of delaying, preventing or deterring a change in control of the Company and may negatively affect the market price of its common stock.
The Board has approved a $12 billion stock repurchase program for the FOX Class A common stock and FOX Class B common stock, which has and in the future could increase the percentage of FOX Class B Common Stock held by LGC Holdco. The Company has entered into a stockholders agreement with LGC Holdco and the LGC Family Trusts pursuant to which the parties have agreed not to take actions that would result in LGC Holdco and the LGC Family Trusts owning, collectively with Lachlan K. Murdoch and certain of his family members (collectively, the “Murdoch Individuals”), more than 44% of the outstanding voting power of the shares of FOX Class B Common Stock (the “Ownership Threshold”). LGC Holdco and the LGC Family Trusts would forfeit votes to the extent necessary to ensure that they and the Murdoch Individuals collectively do not exceed the Ownership Threshold, except where a Murdoch Individual votes his or her own shares differently from the others on any matter.