Recently, Bloomberg reported that News Corp. (NWSA) seeks to reach a strategic decision with Specific Media regarding the sale of MySpace, its social networking site, for about $35 million in cash and stock.
News Corp. had acquired the Beverly Hills, California-based MySpace in 2005 for a price of $580.0 million. The selling process was triggered way back after the site tumbled miserably despite its early success, and constantly lagged behind its competitor Facebook Inc. with respect to its clients.
Earlier, the company employed Allen & Co., a New York-based investment bank, to advice about the strategic alternatives for its social-networking website.
However, it is not certain whether a consensus will be reached with the California based Specific Media. Hence, News Corp. is also in discussion with Golden Gate Capital, a private-equity firm from San Francisco.
Moreover, in its endeavor to sell its sagging business, the social networking site will lower its headcount by 50.0% or approximately 250 staffs. Apart from the above two contenders, the social networking site’s co-founder Chris DeWolfe and Austin Ventures are also interested in the bid.
Founded in 1922 and headquartered in New York, News Corporation is a diversified global media company operating under Cable Network Programming (which includes STAR Group Limited), Filmed Entertainment, Television, Direct Broadcast Satellite Television and Publishing.
News Corporation’s significant international presence has helped it to broaden its client base and product portfolio. The company primarily operates in the United Kingdom, Continental Europe, Australia, Asia and Latin America apart from the United States. We believe that its strong international exposure will drive growth in the coming quarters.
Currently, we maintain a long-term Neutral recommendation on the stock. Moreover, News Corp., which competes with Time Warner Inc. (TWX), holds a Zacks #3 Rank, which translates into a short-term Hold rating.
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