Dual offers for Fairfax drive up share price

THE prospect of a bidding war for Fairfax Media between two US private equity funds has driven its shares to a fresh sixyear high.

San Francisco-based Hellman & Friedman lodged an indicative cash offer of between $1.225 and $1.25 for a Fairfax share late on Wednesday, valuing the newspaper publisher at between $2.82 billion and $2.87 billion. It trumps the improved $2.76 billion bid lobbed by TPG Capital and Ontario Teachers’ Pension Plan Board on Monday.

The new bid pushed Fairfax shares as high as $1.24 yesterday, their best value since May 3, 2011.

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

“The Fairfax board appreciates the support shareholders have demonstrated for Fairfax’s current strategy and the potential separation of the Domain Group,” chairman Nick Falloon said in a statement.

“We have carefully considered the indicative proposals and believe it is in the best interests of shareholders to grant both parties due diligence.”

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

It then returned with an allcash bid of $1.20 a share for the whole company.

That would include regional newspapers and Fairfax’s 50 per cent stake in local Netflix rival Stan.

Hellman & Friedman’s bid is also for the whole company.