Fairfax shareholders turn down TPG’s offer
SYDNEY: US buyout firm TPG Capital Management LP led a A$2.2 billion (US$1.6 billion) approach for most of struggling Australian newspaper publisher Fairfax Media Ltd, a move Fairfax shareholders quickly rebuffed as too low.
The cool response suggests TPG and partner the Ontario Teachers’ Pension Plan Board (OTTP) will need to raise their indicative 95 Australian cents per share offer, which is below Fairfax’s last closing price.
It also interrupts Fairfax’s much anticipated plan to unlock shareholder value by spinning off its lucrative property listings unit, Domain, the most valuable part of the business after a collapse of earnings at news mastheads The Sydney Morning Herald and The Australian Financial Review.
The proposal involved the North Americans taking just Domain, the SMH and the AFR, leaving shareholders with the publisher’s New Zealand titles, its stake in a online television streaming start-up and its debt.
“It’s an easy thanks but no thanks,” said Lee Mickelburough, head of Australian equities at Henderson Global Investors Ltd, which owns about 5% of Fairfax shares. “It’s a troublesome structure to say that we get 95 cents for the good business and you get to keep the debt for the transition businesses. It’s cheeky, the way they’ve structured it.”
The approach on Friday came days after many Fairfax journalists walked off the job in a weeklong strike over yet another round of editorial job cuts, as management slashes costs in an turnaround effort.
It also follows a regulator’s rejection of its plan to sell its New Zealand arm due to competition concerns a week ago.
On Saturday, however, the government unveiled a plan to deregulate media ownership rules, opening the door for alternative offers for Fairfax.
A TPG spokesman declined comment yesterday.