Fairfax Media is at the centre of a bidding war after another US private equity firm weighed in with a better offer.

San Francisco-based Hellman & Friedman made an indicative cash offer of between $1.225 and $1.250 per share late on Wednesday, valuing the company at between $2.82 billion and $2.87 billion.

Brian Powers, Hellman & Friedman’s emeritus chairman and senior advisor, ran Kerry Packer’s publishing group PBL for five years before switching to Fairfax where he presided over the company as chairman between 1999 and 2002.

The latest offer is higher than the improved bid lobbed by TPG Capital and Ontario Teachers’ Pension Plan Board on Monday.

Fairfax will now open its books to both parties for due diligence, to see whether an “acceptable binding transaction can be agreed” for the whole company.

“We have carefully considered the indicative proposals and believe it is in the best interests of shareholders to grant both parties due diligence,” Fairfax chairman Nick Falloon told the Australian Securities Exchange.

The TPG-led consortium initially offered $2.2 billion for parts of Fairfax, including its money-spinning Domain real estate classified business and its flagship newspapers.

It then returned with an all-cash bid of $1.20, which analysts said suggested it intended to subsequently sell the parts of the business in which it had no interest.

Any formal, board recommended takeover offer would require shareholder approval and approval of both the Foreign Investment Review Board and New Zealand’s Overseas Investment Office.

Fairfax shares were valued at $1.16 ahead of Thursday’s market open and hovering around their recent six-year price high.

Fairfax CEO under scrutiny

Fairfax boss Greg Hywood was criticised for refusing to disclose his salary before a parliamentary inquiry this week.

“Frankly, I thought we were here to talk about the future of journalism,” he told the parliamentary inquiry.

He went on to attack the ABC’s free online news service which he said created an unfair playing field for commercial news websites.

“They use dollars to drive their traffic and they take traffic away from us. Traffic is dollars to us,” Mr Hywood said.

“And if the ABC takes traffic from us by using taxpayer’s money to drive that traffic, it’s using taxpayers’ money to disadvantage commercial media organisations.”