A consortium led by private equity firm TPG has raised its takeover approach for Fairfax to $1.20 per share and is now proposing to buy out the entire firm.
The offer values Fairfax around $2.75 billion and is a 12 per cent premium to the company’s closing share price on Friday.
TPG’s initial approach of 95 cents per share was for Fairfax’s real estate advertising arm Domain and its major mastheads, the Sydney Morning Herald, The Age and the Australian Financial Review.
That deal would have left existing Fairfax shareholders with the firm’s regional newspapers, a majority stake in Macquarie radio, a 50 per cent share in video streaming service Stan and the company’s New Zealand assets.
Fairfax’s board said it is reviewing the revised proposal, but has noted that there is no guarantee it will lead to a firm offer or that the conditions, such as price, of a final offer will remain the same.
The company said it is continuing to progress its own plan to potentially separate the Domain real estate business from the rest of Fairfax.
In February, it announced a potential plan to separately list Domain on the ASX as early as later this year, with Fairfax to retain a majority stake.
The Fairfax board said shareholders do not need to take any action in response to the proposal, and it will provide an update once it has fully assessed the bid.
The proposal is also subject to a number of conditions, including foreign investment approval from both Australia and New Zealand, due diligence, and Fairfax shareholder approval.
The other major member of TPG’s consortium is the Ontario Teachers’ Pension Plan Board.
Regardless of the proposal, Fairfax is continuing to progress the preparation for its spin-off and listing of the Domain business, the company said.
The takeover offer comes amid a trying period for the media giant, with many of its journalists participating in a week-long strike following last week’s announcement that 125 jobs would be cut at The Age, The Brisbane Times, The Sydney Morning Herald and WA Today.
Fairfax had announced the job cuts to save the company $30 million.
The revised takeover bid will be subject to a due diligence, shareholder approval at a Fairfax scheme meeting, and regulatory approvals, including from the Australian Foreign Investment Review Board (FIRB) and New Zealand Overseas Investment Office (OIO).