8-KLeadership ChangesAcquisitions & DispositionsMaterial Agreements+4

Fox Corp 8-K Report, Material Agreement (Mar 19, 2019)

Filed March 19, 2019For Securities:FOXAFOX

Summary

This Form 8-K filing by Fox Corporation (FOXA) on March 19, 2019, marks a pivotal moment: the official separation of Fox Corporation as a standalone, publicly traded entity. This was achieved through a distribution by Twenty-First Century Fox, Inc. (21CF) of its shares in Fox Corporation to 21CF stockholders. The filing details the material definitive agreements, including the Separation Agreement and Tax Matters Agreement, that govern this separation. Notably, Fox Corporation also implemented a Rights Agreement, designed as a 'poison pill' to prevent hostile takeovers by triggering dilution if a single entity acquires a significant stake (15% or more) in the company. This action, alongside the adoption of a new shareholder alignment plan and executive compensation arrangements, signals a strategic move to establish corporate governance and align shareholder interests.

Key Highlights

  • 1Fox Corporation officially became a standalone publicly traded company on March 19, 2019, following its separation from Twenty-First Century Fox, Inc. (21CF).
  • 2Key separation agreements, including a Separation Agreement and a Tax Matters Agreement, were entered into, outlining the operational and tax responsibilities between Fox Corp and 21CF, with The Walt Disney Company also involved in tax matters.
  • 3A 'poison pill' Rights Agreement was adopted, issuing one right per share of common stock, designed to deter hostile takeovers by diluting an acquiring entity's stake if it surpasses a 15% ownership threshold.
  • 4The company paid a one-time dividend of $8.5 billion to 21CF as part of the separation process.
  • 5New directors were appointed to the Board, and executive compensation and long-term incentive plans (Shareholder Alignment Plan - SAP) were established for key executives, including K. Rupert Murdoch and Lachlan K. Murdoch.
  • 6Trading of Fox Corporation's Class A and Class B common stock commenced on the Nasdaq Global Select Market under tickers 'FOXA' and 'FOX', respectively.
  • 7The Board is assessing a capital return framework, potentially including share repurchases and a semiannual dividend, with a focus on protecting stockholders from significant voting control acquisition.

Frequently Asked Questions

This filing is significant because it formally announces and details the completion of Fox Corporation's separation from Twenty-First Century Fox, Inc. (21CF), establishing it as an independent, publicly traded company. It outlines the key agreements governing this separation and introduces measures like a shareholder rights plan to protect the company and its shareholders.

The Rights Agreement is a defensive measure designed to prevent any single entity from acquiring a controlling stake in Fox Corporation without the Board's approval. If an 'Acquiring Person' buys 15% or more of the company's stock, the rights become exercisable, allowing other shareholders to purchase additional stock at a discount, thereby diluting the acquirer's ownership percentage and making a hostile takeover more expensive.

The Tax Matters Agreement details the tax responsibilities. Disney and 21CF will indemnify Fox Corporation against taxes related to 21CF's consolidated or separate tax returns, including those from the separation. Conversely, Fox Corporation will indemnify 21CF for taxes related to Fox Corporation's separate tax returns and certain other specified taxes.

The SAP is an equity incentive plan designed to align the interests of executives with those of shareholders. The filing details significant initial awards of restricted stock units and stock options granted to key executives like K. Rupert Murdoch and Lachlan K. Murdoch under this plan, with vesting schedules tied to continued employment.