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TPG Capital Withdraws Buyout Bid for Australia's Fairfax Media

Updated on
  • Hellman & Friedman was left as sole bidder for publisher
  • Offer by Hellman valued Fairfax at as much as A$2.9 billion

Fairfax Media Ltd. pulled out of a process to examine selling the Sydney-based publisher after TPG Capital said it was withdrawing its offer, leaving U.S. private equity firm Hellman & Friedman LLC as the potential sole bidder.

TPG said it had “exited the Fairfax due-diligence process” and decided not to proceed with an offer for the company, according to an emailed statement from a TPG spokesman to Bloomberg on Sunday.

Fairfax Chief Executive Office Greg Hywood said on Sunday in a memo to staff, a copy of which Bloomberg saw, that the company would announce to the Australian Stock Exchange on Monday that it had “brought to an end the private equity process ... and will proceed with our own strategy.”

TPG sent a letter to Fairfax Chairman Nick Falloon on Sunday to notify him the private equity group was bowing out of the bidding process, the Australian Financial Review, a Fairfax newspaper, reported earlier in the day. Hellman & Friedman sent a letter to Fairfax’s board on Friday stating it had not walked away from the deal, although it had not put forward a binding bid, the AFR said.

Fairfax’s Australian assets include the Sydney Morning Herald and Macquarie radio network as well as the Domain real-estate advertising division, the publisher’s main earnings engine. The takeover proposals followed years of job cuts and asset writedowns at Fairfax, whose shares had tumbled from a pre-financial-crisis high amid disruption of traditional media’s revenue streams.

Bids Unsolicited

The company was valued at as much as A$2.9 billion ($2.2 billion), after Hellman offered between A$1.225 and A$1.25 a share for Fairfax in May, compared with an earlier A$1.20-a-share cash offer from a TPG consortium that included Ontario Teachers’ Pension Plan Board. The publisher granted both private-equity suitors access to its books in May to “establish whether an acceptable binding transaction can be agreed.”

Hywood said in Sunday’s statement the bids from the two private equity players were unsolicited. 

“But once we received the above market indicative bids we acted in the best interests of our shareholders and ran a process.” he said. “It is common in these situations for indicative bids not to translate to binding bids.”

Fairfax shares have risen 24 percent this year, beating the broader S&P/ASX200 index’s 1 percent gain. They closed 8.3 percent lower at A$1.10 on Friday.

The media company said in February it was considering hiving off Domain into a separately listed business after its value soared along with a five-year real-estate boom in Sydney. The unit could double in value by 2020 to as much as A$4 billion, UBS Group AG said in May.

TPG, a U.S. alternative-investment firm that oversees about $70 billion, and other owners in March agreed to sell Australian utility Alinta Energy Holdings Ltd. for more than A$4 billion, while the buyout firm also sold down its stake in poultry company Inghams Group Ltd. in an initial public offering last year.

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