May 18, 2017 Last Updated 1:17 pm

Fairfax Media receives a 2nd bid from US private equity company

Hellman & Friedman, with extensive media ownership experience, appears the frontrunner to acquire the Australian publisher, with a bid slightly higher than that of PE firm TPG

A second American private equity firm has emerged to bid on the assets of the Australian publisher Fairfax Media. Hellman & Friedman was founded in 1984, and has offices in San Francisco, New York and London.

The company has had several media or media-related companies inside its portfolio in the past including the B2B publisher Advanstar, a share of Axel Springer, the marketing firm Digitas, DoubleClick before its sale to Google, and The Nielsen Company. H&F acquired the consumer marketing company Catalina in 2007.

TPG’s original bid was for part of the Fairfax business, the online property classifieds business Domain as well as the newspapers The Sydney Morning Herald, The Age and The Australian Financial Review. The PE firm then revised its bid to go for 100 percent of Fairfax at a price of $2.76 billion, or $1.20 per share.

Now, H&F’s bid is for 100 percent of Fairfax, and is valued at $2.87 billion, or between $1.225 to $1.250 per share.

Fairfax had earlier announced that it would spin off its digital real estate business, Domain. But now both companies will be ainvited to conduct due diligence as it appears that the Fairfax board is open to a sale of the entire company.

“The Fairfax Board appreciates the support shareholders have demonstrated for Fairfax’s current strategy and the potential separation of the Domain Group,” Fairfax’s Chairman Nick Falloon said. “We have carefully considered the Indicative Proposals and believe it is in the best interests of shareholders to grant both parties due diligence to explore whether a potential whole of company proposal is available.”

Meanwhile, TPG’s head of Australia and New Zealand operations, Joel Thickins, has agreed to meet with the Senate Select Committee on the Future of Public Interest Journalism in a special hearing on Friday into what TPG plans to do with Fairfax should they acquire the company.

Australian media oversight is much stronger than American media oversight, something these US private equity companies will have to deal with. Today in the US, the Federal Communications Commission voted to begin the process of rolling back existing media regulation rules which may lead to a free-for-all in the media mergers and acquisitions area.

Here is the announcement from Fairfax Media:


SYDNEY, New South Wales — May 18, 2017 — Fairfax Media Limited on the evening of 17 May 2017 received an indicative, preliminary and non-binding proposal on behalf of funds affiliated with Hellman & Friedman LLC (together with affiliates, Hellman & Friedman) to acquire 100% of the shares in Fairfax (on a fully diluted basis) at a price between $1.225 to $1.250 per share, with all consideration being in cash. The proposal assumes no dividends are paid by Fairfax from the date of the proposal to completion (H&F Indicative Proposal).

The H&F Indicative Proposal follows the revised, indicative, preliminary and non-binding proposal from the TPG Consortium to acquire 100% of the shares in Fairfax (on a fully diluted basis) at a price of $1.20 per share (reduced by any dividend paid by Fairfax between now and completion), as announced on 15 May 2017 (TPG Indicative Proposal) (together with the H&F Indicative Proposal, the Indicative Proposals).

The Fairfax Board has considered the Indicative Proposals and determined they will invite both Hellman & Friedman and the TPG Consortium to conduct due diligence in order to establish whether an acceptable binding transaction can be agreed.

Commenting on the Indicative Proposals, Fairfax’s Chairman Nick Falloon said: “The Fairfax Board appreciates the support shareholders have demonstrated for Fairfax’s current strategy and the potential separation of the Domain Group. We have carefully considered the Indicative Proposals and believe it is in the best interests of shareholders to grant both parties due diligence to explore whether a potential whole of company proposal is available.”

The Indicative Proposals are subject to various conditions, including due diligence, Fairfax shareholder approval, and obtaining requisite regulatory approvals, including Australian Foreign Investment Review Board (FIRB) and New Zealand Overseas Investment Office (OIO) approval.

The Fairfax Board notes that there is no certainty that either of the Indicative Proposals will result in an acceptable offer for Fairfax, what the terms of any such offer would be, or whether there will be a recommendation by the Fairfax Board.

Fairfax shareholders do not need to take any action in response to the Indicative Proposals and the Fairfax Board will update shareholders as appropriate.

During the due diligence period Fairfax intends to continue progressing the announced potential separation of Domain Group.

Macquarie Capital and Herbert Smith Freehills are advising Fairfax.

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