Open house at Fairfax Media as a second bidder turns up

A second American private equity firm has offered to buy Fairfax Media, while the original bidder has agreed to be grilled by a Senate committee about its plans for journalism at the media group.


The publisher of The Age, The Sydney Morning Herald and The Australian Financial Review said on Thursday morning it had received an indicative, preliminary and non-binding proposal from Hellman & Friedman to buy 100 per cent of the company for $2.87 billion.

The bid values the company between $1.225 and $1.250 a share in cash, and assumes the company pays shareholders no dividends.

It comes after a consortium featuring US private equity group TPG Capital and the Ontario Teachers’ Pension Plan (OTPP) made an approach to Fairfax earlier this month at $1.20 a share, or $2.76 billion.

Hellman & Friedman has been described as a “more credible” buyer by media industry observers, given its historical relationship with Fairfax Media.

Meanwhile, TPG on Thursday morning agreed to appear before the Senate Select Committee on the Future of Public Interest Journalism, after failing to appear on Wednesday. A special hearing has been scheduled for Friday afternoon in Melbourne.

The committee is likely to grill TPG’s head of Australia and New Zealand operations, Joel Thickins, on what TPG and OTPP plan to do with Fairfax if they emerge as the winning bidders.

A spokesman for TPG said Mr Thickins was prepared to affirm the consortium’s commitment to Fairfax’s Charter of Editorial Independence which protects journalists from commercial interference.

The committee is also likely to summon representatives of Hellman & Friedman for similar questioning. In anticipation of a bidding war the market pushed Fairfax shares up 7 per cent to $1.24.

The media company said it would now open its books to both bidders so they could conduct due diligence and establish if an acceptable deal could be agreed on. In about one week Fairfax will create what is known as a “data room” where bidders get up to six weeks’ access to read internal information and possibly interview key staff.

Fairfax chairman Nick Falloon said the board had carefully considered both proposals and believed “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.”

Hellman & Friedman, headquartered in San Francisco, has previously bought media assets including the photography wire service Getty Images, which it purchased in 2008 and sold in 2012.

In 2003, Hellman & Friedman bought into Axel Springer, the publisher of German newspapers Die Welt and Bild. It exited its investment in 2010. It also bought and then in 2015 floated German online classified’s site Scout24, which is currently headed up by former REA Group chief executive Greg Ellis.

Fairfax said moves to separate its real estate advertising arm Domain would continue during the due diligence period. iFrameResize({enablePublicMethods : true, heightCalculationMethod : “lowestElement”,resizedCallback : function(messageData){}, checkOrigin: false},”#pez_iframeA”);

Media industry commentator Mark Westfield noted Hellman & Friedman senior adviser Brian Powers was a former chairman of Fairfax Media (from 1998 to 2002).

Mr Powers also spent many years working alongside current Fairfax Media chairman, Nick Falloon.

“[Hellman & Friedman] wouldn’t be interested in buying [Fairfax] unless they saw the assets of The Age, Sydney Morning Herald and Australian Financial Review and Domain as good assets to maintain,” Mr Westfield said.

“They are a more credible buyer than TPG. They have got a history with Fairfax and they know the business.”

“There may be some asset sales, but they would not be doing this if they were not genuine buyers looking at maintaining the mastheads.”

Hellman & Friedman were also touted as a potential bidder for Network Ten in 2014, but that deal never eventuated. Venture capitalist Mark Carnegie is advising Hellman & Friedman.

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