Published: Thu, May 18, 2017
Economy | By Melissa Porter

TPG Capital Leads $2.7 Billion Bid For Fairfax

TPG Capital Leads $2.7 Billion Bid For Fairfax

Sources said that Fairfax's board had not nominated a price it considered acceptable for the whole company, but insiders suggest a bid of A$1.20 a share was not far from the mark.

Fairfax has said it is reviewing the revised buy-out proposal, while noting it is not certain it would turn into a firm offer.

TPG owns around 4.7% of Fairfax Media and a total bid value of over $3 billion (including debt), plus the final dividend and any franking credits would probably win over shareholders, some of whom have told TPG to lift its game. Last week the media company told the ASX the US-based firm was offering 95 cents a share for the assets.

That offer would have omitted Fairfax NZ, Fairfax's Australian community newspapers, its 55 per cent stake in Macquarie Media radio and its half stake in Australian internet television service Stan.

The new bid, at $2.76 billion, would see a cash buyout of Fairfax shares at $1.20.

On Friday, after a seven-day strike interrupted negotiations, journalists received more information about the latest redundancy round, which will see one-quarter of all newsroom roles disappear.

Fairfax is the publisher of The Sydney Morning Herald and The Australian Financial Review, but its best-performing asset is property listings website Domain, which has boomed amid the long-term decline of newspaper earnings.

The revised TPG bid is subject to a number of conditions, including due diligence, shareholder approval, and regulatory approvals including from the Australian Foreign Investment Review Board and New Zealand Overseas Investment Office.

Long-suffering shareholders had pinned their hopes on Fairfax's plan to spin off Domain as it continues to cut costs at its newspapers.

Deutsche analyst Entcho Raykovski said the "compelling" $2.76 billion offer required engagement from the Fairfax board, while Citi analyst David Kaynes said the all-cash offer is highly likely to proceed.

In a statement, Fairfax said shareholders did not need to take any action in response to the revised proposal and promised to provide an update once it had been fully assessed.

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