TPG makes new bid for Fairfax with $2.7 billion cash offer

A consortium affiliated with TPG Private Equity group has raised its initial offer to acquire Fairfax media after a market share rise.
The offer values Fairfax at around $2.75 billion and is a 12% rise on the company’s closing share price of $1.07 last week. In early trade today, Fairfax shares rose 7% to $1.147, which represents an increase of 7%.

The previous joint offer with the Ontario Teachers’ Pension Plan Board was for a combination of $2.18 billion in cash, at 95 cents a share with additional shares in Fairfax’s real estate advertising mainstay Domain and its major mastheads, the Sydney Morning Herald, The Financial Review and The Age.

With the revised offer, TPG’s intention is to acquire all aspects of the company. Analysts have valued Domain Real Estate, ironically now the jewel in the crown of this troubled company, at $2.05 billion alone. This a very different story from times when revenue from classified advertising in newspapers was described as a golden ticket.

Representatives for Fairfax have not yet commented but the board will be considering the offer in its current state.

Under this proposal, Fairfax shareholders would retain current assets in New Zealand, the regional newspapers business, a 50% share in the Stan streaming venture, and its current slice of the Macquarie Radio Network. The proposal would also see Fairfax shareholders retain the company’s net debt.

The founder of CCZ Equities and media advisor, Roger Coleman believes TGP’S cash offer will be attractive to shareholders due to its certainty.

“I think this will get it over the line for the simple reason that the deterioration of Fairfax’s operational performance is a greater concern to shareholders,” he asserted.

The revised TPG bid will be subject to conditions that include the usual due diligence, approval of shareholders, and regulatory approvals, including the Australian Foreign Investment Review Board and New Zealand Overseas Investment Office. The Fairfax Board of Directors is reviewing the revised proposal.

“Regardless of whether the Revised Indicative Proposal proceeds to an offer for Fairfax, the Fairfax Board believes that Fairfax has an announced strategy for the future that will deliver value for shareholders,” the board said.

“Fairfax is continuing to progress the preparation for the announced potential separation of Domain Group.”

Fairfax is undertaking council from Macquarie Capital and Herbert Smith Freehills. Australia Business News will keep you updated on the progress of this momentous offer.