said Wednesday that it had entered into a transaction putting it on track to acquire $1.5 billion of
The announcement came the same day that the Australia-based News Corp. said it had received Australian judicial approval to reincorporate in the U.S.
That OK was the final authorization News Corp. needed to relocate. The media and entertainment conglomerate had
received the necessary shareholder approval last week.
The Liberty transaction, called a "total return swap," enables Liberty to get dibs on a big block of News Corp. shares without actually purchasing the stock. That block of 85 million shares, now owned by Merrill Lynch, came on the market as Australian index funds rebalanced their shares to reflect News Corp.'s departure for the U.S.
"We would like to own these shares, but it's subject to governement approvals," says Liberty's spokesman.
Upon termination of the transaction in April 2005, Liberty will have to pay Merrill an amount equal to any decline in the fair market value of the swap shares, while Merrill will have to pay Liberty any increase in the fair market value of the shares.
Liberty may choose to purchase the shares from Merrill in April, assuming it receives U.S. regulatory clearance.
The deal is not the first transaction that Liberty, headed by legendary dealmaker John Malone, has entered into related to News Corp.'s stock.
In January, Liberty
gained a 9.15% voting stake in News Corp. in return for $693 million, plus nonvoting shares it held in the company.
Liberty also says it hedged its exposure to 80 million shares of News Corp.'s new Class B common stock by entering into equity collars expiring in 2006.
As part of News Corp.'s move, American depositary shares in News Corp.'s stock stopped trading on the
Tuesday. News Corp.'s old nonvoting preferred shares are being replaced by two shares apiece of nonvoting Class A shares, while the old voting shares are being replaced by two voting Class B shares apiece.
The new shares are slated to trade on a when-issued basis until Nov. 12.