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Fairfax tipped to reject $2.5bn TPG offer

Tuesday, 09 May 2017
By Print21

Fairfax Media is expected to reject a $2.5 billion ‘cherry pick’ offer from equity group TPG for its prime asset Domain and the company’s best known mastheads – The Sydney Morning Herald, The Age and The Australian Financial Review.

The US-based investment firm would pay 95c per share, equivalent to almost $2.5 billion. Fairfax’s remaining assets would include Australian Community Media, New Zealand Media, shareholdings in Macquarie Media and Stan and would retain Fairfax’s current debt.

Several large Fairfax shareholders have voiced concerns about the value and structure of the proposal.

“It’s an easy thanks but no thanks,” Lee Mickelburough, head of Australian equities at Henderson Global Investors, which owns 5 per cent of Fairfax, told AFR.

“The Fairfax board notes there is no certainty that the indicative proposal is capable of being implemented, given the complexity involved in splitting the businesses,” said Fairfax in a company statement to the ASX. “The proposed split may not optimise shareholder value.”

“The current deal basically cherry picks the best assets and Fairfax shareholders are left with assets whose value is hard to work out,” said Patrick Potts, an analyst at Legg Mason Martin Currie, which owns 6.1 per cent of Fairfax.

Potts told Fairfax Media that the bid for Domain and the metropolitan mastheads was too cheap and left Fairfax shareholders in the difficult position of owning a collection of less attractive assets.




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