The New York state attorney general and US securities regulators were investigating unusual trading in Dow Jones stock and options before it announced a $5 billion takeover bid by News Corp last week.
Dow Jones, which runs a financial newswire service and publishes the Wall Street Journal newspaper, said the company received a subpoena from the attorney general and an inquiry from the US Securities and Exchange Commission.
A spokesman for News Corp said his company had received similar documents.
A surge in volume in Dow Jones's June and September call options as late as Monday suggested to some analysts that some investors knew an offer was in the works, but were unsure about the exact timing.
On Monday, the September 45 call options traded 3,464 contracts in a range of 30 cents to 35 cents, while 641 of the June 40s traded at 25 cents, according to Michael Schwartz, chief options strategist at Oppenheimer in New York. Typical daily average March volume in Dow Jones call options is about 85 contracts.
Call options allow holders to buy stocks at a specific price and time.
News Corp offered to buy Dow Jones for $60 a share and had submitted an offer letter to the Bancroft family, the controlling shareholder group, as long as two weeks ago, Dow Jones said on Tuesday.
Dow Jones stock jumped nearly 61 per cent on Tuesday, hitting a session high of $58.47 on the New York Stock Exchange.
Dow Jones options rose far more spectacularly. The September 45s rocketed 3,271 per cent to $12.10 from Monday's close of 35 cents. The June 40s surged 5,300 per cent to $16.20 after ending Monday's session at 30 cents.
The company said its board would not act on Murdoch's $60 per share offer after a majority of the Bancroft family, which controls 64.2 per cent of Dow Jones voting stock, indicated they would veto a deal. - (Reuters)
An £8 billion takeover of Reuters looked imminent yesterday after it was reported the news and information group planned to back an offer from Canada's Thomson.
The two groups are understood to have been talking about combining for some time and believe the change of ownership will be accepted by the directors of the Reuters Founders Share Company, which has special voting powers to block any takeover should it compromise Reuters' "integrity and freedom from bias". - (PA)
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