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Fairfax sale teeters as private equity house TPG withdraws from bidding

The sale of Fairfax Media appears to be on the verge of collapse, with one potential bidder failing to make an offer and the other withdrawing from the process.

TPG Capital – the private equity firm which kicked off bidding for the media company with a preliminary offer worth nearly $2.5bn – has decided not to proceed after getting a look at the current state of Fairfax’s books,  the Australian Financial Review reports.

TPG, which flagged it would be seeking a new deal with Fairfax Media in May, has reportedly sent a letter to Nick Falloon, Fairfax Media’s chairman, stating it would not be a bidder.

TPG’s main interest in Fairfax appeared to be its real estate offering Domain, along with newspapers mastheads the Australian Financial Review, Sydney Morning Herald and The Age. The company also owns a stable of regional and NZ newspapers along with stakes in the Macquarie Media radio network and TV streaming service Stan.

Hellman & Friedman, which was the other private equity house participating in the due diligence diligence phase of the process had not entered a bid by Friday’s provisional deadline. However, the company has not formally stated if it is withdrawing from the bidding process altogether.

By entering the online dataroom set up by Fairfax, both company’s were able to see up-to-date information about Fairfax’s current performance not yet in the public domain.

Late on Friday afternoon Fairfax’s share price slumped by more than 8% from $1.20 to $1.10 as word began to leak out that the bidding process was falling apart. The share price is likely to take a further battering when the ASX reopens on Monday.

Assuming the private equity interest is over, Fairfax is likely to proceed with its own plans to spin off Domain and float it on the ASX.

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