Fairfax bid may not be of value to investors

FAIRFAX Media’s board has given no indication of whether if will make a recommendation on a $2.2 billion proposal to split up the company, but has warned that it may not be good value for shareholders.

A consortium led by USbased private equity giant TPG Capital and Canada’s Ontario Teachers’ Pension Plan Board wants to buy Fairfax Media’s Domain real estate classified business, the unit controlling flagship newspapers The Sydney Morning Herald and The Age, and its events and digital ventures businesses.

Under the proposal, the remaining businesses – including regional newspapers, New Zealand Publishing, Macquarie Media and the Stan streaming service – would be grouped under a new ASX-listed company called New Media Co, which would take on all of Fairfax’s current net debt.

Investors seemed to be interested in the TPG proposal, driving Fairfax shares up 2.5¢, or 2.35 per cent, to $1.08 yesterday, their highest level since March 29.

However, the Fairfax board said a demerger would require the approval of shareholders and regulators including the Foreign Investment Review Board – and in any case may be too complex to carry out.

Fairfax Media last week reported that total group revenue was down 6 per cent in the 17 weeks to April 23, from the prior corresponding period. The proposal also complicates the situation involving Domain business, the most profitable arm of Fairfax, which it preparing to list on the ASX at the end of 2017.