Fairfax Media reveals details of TPG takeover proposal
Fairfax Media has revealed details of the takeover proposal for the company which emerged over the weekend.
In an update to the ASX, Fairfax said that on Friday night it received an “unsolicited, preliminary, non-binding indication of interest” from a consortium including TPG Group and Ontario Teachers’ Pension Plan Board.
The deal would see the TPG consortium take over Fairfax and keep its metro mastheads, Domain and its events business.
Rumours began circling over the weekend of private equity firm TPG Group’s interest in seeking a deal which would see it take Fairfax Media’s Domain online real estate business along with the company’s three biggest mastheads – The Sydney Morning Herald, The Age and The Australian Financial Review.
In the statement posted to the ASX this morning, the details of the proposed deal have been revealed with the TPG Consortium offering $0.95 per share for the assets it takes with it.
Fairfax’s share price – listed as FXJ – closed on Friday worth $1.06, giving it a market capitalisation of $2.44bn.
The deal would see existing Fairfax shareholders retain 100% of the company’s regional and NZ newspapers, and shareholdings in Macquarie Media and Stan, through a distribution to them of shares in a listed vehicle containing those businesses and the existing Fairfax net debt.
The proposal is subject to a number of conditions including due diligence, shareholder approval and obtaining requisite regulatory approvals including Foreign Investment Review Board (FIRB) approval.
According to the statement posted to the ASX, the Fairfax Board of Directors is reviewing the proposal however the Board notes “that there is no certainty that the Indicative Proposal is capable of being implemented given the complexity involved in splitting the businesses”.
“This proposed spilt of businesses may not optimise shareholder value,” the statement reads.
The statement also asserts there is no certainty the proposal will result in an offer for Fairfax.
“Regardless of any potentially proposal, the Fairfax Board believes that Fairfax has a very attractive future and that the Company is well positioned to continue to deliver shareholder value. Fairfax is continuing to progress the announced potential separation of Domain Group,” it states.
The manoeuvring comes against a backdrop of government attempts to change the laws on media ownership, with the Turnbull Government announcing its new media reform package yesterday which will look to repeal the two out of three and 75% audience reach media ownership rules. If changed, it would remove barriers to companies owning media assets in multiple traditional channels in the same city, and spark a new wave of media consolidation.
Macquarie Capital and Herbert Smith Freehills are advising Fairfax.
Miranda Ward worked for Mumbrella from 2013 to 2017, eventually becoming deputy editor. Miranda joined Mumbrella in September 2013 from Sky News.
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The suggestion that TPG’s proposal is problematic because of separation issues is ludicrous. By far the most problematic separation is the Domain “float”, which TPGs proposal correctly ignores.
Fairfax as usual winds up Peter Cox as its mouthpiece. A man who has zero experience in newspapers and digital media.
Tempting to think that this is a wrestle between Hywood and catalano, the former besties.
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interesting that TPG (and others including, I”m guessing, Catalano) consider the Fairfax mastheads to be critical marketing and distribution channels for Domain. AM pretty sure that while REA derives some benefit from the News Corp mastheads, they are nowhere near as dependent on them as Domain is on the Fairfax metro mastheads for traffic and distribution.
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Interesting that James Chessell is the bearer of Fairfax announcement in today’s SMH. London-based, he must have excellent time management. Or a direct line to Sue Cato.
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Today’s reporting peeks back a layer. The SMH reports that catalano favours the tpg deal over the Hywood float of Domain. The Oz reports that Domain would lose “contra” advertising if it separated from mastheads.
So it seems that Domain is subsidised by the mastheads. Which is why a “float” is opposed and why catalano likes the tpg plan.
Who’d have thought?
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Yes the fantastic element of the whole Domain IPO proposal has always been the failure to address what the cash flows between the spin-off and remainder Fairfax would look like.
If the mastheads were properly remunerated for their distribution and promotional role (both print and digital), what would happen to Domain’s valuation?
TPG have clearly decided these huge separation issues make the proposed Domain IPO uninvestible.
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More than promotion it appears. More like shared inventory. A direct subsidy from the masthead business to the Domain p&l. Explains much.
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James Chessell has cracked it open.
Hywood vs Catalano. Both exactly the same creatures, professionally and personally.
Won’t be breaking bread for a long time….
Catalano has a new bestie, Mr Thickens.
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