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The
fresh offer from TPG [TPG.UL] and partner Ontario Teachers'
Pension Plan Board (OTPP) would allow shareholders to cash out
completely rather than leaving them with scrip in a piecemeal
collection of small assets including radio, regional newspapers
and television streaming.
"It’s better to have a complete bid," said John Grace, co-head
of equities at Ausbil Investment Management, Fairfax's largest
shareholder with a 7.8 percent stake. He added however that it
was too early to say whether the bid should succeed.
Fairfax is the publisher of The Sydney Morning Herald and The
Australian Financial Review, but its best-performing asset is
property listings website Domain, which has boomed amid the
long-term decline of newspaper earnings.
TPG is now offering A$1.20 a share for the entire business,
compared with the prior offer of A$0.95 a share for Domain and
top mastheads.
It represents a 12 percent premium to Fairfax's A$1.07 closing
price on Friday and sent the shares up as much as 8.4 percent to
a six-year high of A$1.16 on Monday.
The previous offer did not include the publisher's radio
division, regional and New Zealand titles, a stake in an online
television streaming start-up and its debt.
DOMAIN SPIN-OFF
Long-suffering shareholders had pinned their hopes on Fairfax's
plan to spin off Domain as it continues to cut costs at its
newspapers. Many of its journalists this month went on strike
for a week to protest editorial job cuts.
Fairfax has said it is considering the TPG proposal - which is
subject to a shareholder vote and foreign investment approvals -
but is also continuing to progress preparations for the planned
separation of Domain.
"While the revised offer is clearly superior in that is an offer
for the entire company, TPG may need to offer more than A$1.20
if it is to win the support of all shareholders," said Alex
Waislitz, chairman of Thorney Opportunities Ltd, which holds
Fairfax shares.
TPG's change of mind came after the Australian government
revealed it is planning to deregulate media ownership, which
could increase Fairfax's options as either a target for another
suitor or as an acquirer.
A TPG spokesman declined to comment.
In a statement, Fairfax said shareholders did not need to take
any action in response to the revised proposal and promised to
provide an update once it had been fully assessed.
(Reporting by Jamie Freed; Editing by Stephen Coates)
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