Some News Corp. ( NWS) shareholders are suing over what they call a broken poison-pill promise. Institutional shareholders in the U.S., Australia and Europe brought the suit in Delaware Chancery Court Friday, saying News Corp. broke a promise to get shareholder approval before extending the antitakeover plan. The suit names as defendants CEO Rupert Murdoch, his son the former News Corp. exec Lachlan Murdoch, COO Peter Chernin and other corporate officers. A poison pill thwarts a hostile takeover by threatening to dilute the stock through the issue of rights to buy shares. News Corp. adopted one last fall in response to Liberty Media ( L) chief John Malone's surprise announcement that he had doubled his voting stake in the media giant. News Corp. said in August it intended to extend the provision for two years, raising the ire of shareholders who claim they were promised a say on the subject when the company decided to reincorporate in America last year. A News Corp. rep called the suit "baseless, meritless and frivolous." Plaintiffs include two American retirement funds and a number of big international fiduciaries, many of which are in Australia. They are: Connecticut Retirement Plans and Trust Funds, and the trustees of the Clinton Township, Mich., Police & Fire Retirement System; Australia's UniSuper; Public Sector Superannuation Scheme Board; Commonwealth Superannuation Scheme Board; United Super Pty. Ltd.; Motor Trades Association of Australia Superannuation Fund Pty. Ltd.; H.E.S.T. Australia Limited; CARE Super Pty. Ltd. as well as other foreign institutional investors including Hermes Assured Limited; Universities Superannuation Scheme Limited and Stichting Pensioenfonds ABP, an enormous Swiss-run fund.
"News Corp., which was founded and is still largely controlled by media mogul Rupert Murdoch, made the promise not to tamper with the poison pill provisions last fall, during the course of intense negotiations with shareholders to change the company's corporate domicile," reads a statement from the plaintiffs. The shareholders say that in return for approving News Corp.'s move from Australia to Delaware, where they claim shareholders have fewer protections, they were given assurances including that the company would not enact the poison pill provision for more than a year at a time. "The argument is not about the merits of the Shareholder Rights Plan. Our members simply want News Corp. to keep its word," said Michael O'Sullivan, president of the Australian Council of Super Investors, in a statement. "News Corp.'s explanation -- that it changed its policy because circumstances have changed -- is unacceptable." On Friday, afternoon News Corp. shares were trading down 12 cents to $15.84.