Not so long ago I published here an article And so the battle of The Dow begins describing then upcoming takeover of one of the America’s business crown jewels by media magnate Rupert Murdoch. As the wheels of the business world hardly spin in direction Mr. Murdoch would not anticipate, it is now almost certain, that he will be soon counting this excellent media franchise amongst his very own.

As has been reported few days back, the US$5 billion takeover of Dow Jones & Co has been approved by the company’s board and its future now rest in hands of controlling shareholders, the Bancroft family.

The Bancroft’s, who hold around 64% of the voting stock initially rebuffed the Murdoch’s offer stating their concerns about editorial independence should the takeover go ahead. Lately, however, Bancroft’s appear much less united in their opinion as some of the family members are reportedly changing their minds.

One thing I would like to point out here is Murdoch’s negotiating approach to this deal. At first he seemingly stunned the company owners (and most of the investing world) with an $60 per share offer ie. offering a hefty premium to The Dow’s share price at the time. Since than, however, he dug in and stubbornly resisted all the pressure asking him to raise his offer.

Obviously some lessons to be learnt here from this mega successful and ultra experienced business icon: The big guys know the fair purchase price of a business they understand and are willing to pay it regardless of external conditions. They offer once, they offer big and you won’t see them haggling for “coins�? the way you are used to from market stall owners in Egypt or Persia.

In other words the majority of big guns’ offers are the “take it or leave�? kind. Perhaps you have read about similar tactics employed by the World’s savviest investor Mr. Warren Buffett and now The Dow’s takeover is a prime example, that the super successful media magnate Mr. Rupert Murdoch has been going around his business in this manner for who knows how long. Maybe we should think about this next time we miss out on a great investment just because the price was few cents higher than we intended to pay for it.

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This entry was posted on Thursday, July 26th, 2007 at 3:02 pm and is filed under Miscalleanous, My View. You can follow any responses to this entry through the RSS feed. You can leave a response, or trackback from your own site.