What a difference a week makes! Fairfax looked ready to be sold for $2.2 billion last week, but a new valuation has the company valued at $3.5 billion and now shareholders are being urged not to sell until one of the two current bidders ups their offer.
Yesterday, global wealth firm Morgan Stanley valued the entire Fairfax business at just shy of $3.5 billion or a $1.50 a share.
The two potential bidders for the business, the US private equity firms TPG and Hellmen & Friedman have bid $2.7 billion and $2.9 billion respectively.
Fairfax-owned media sites have reported that the board has opened up its books for both bidders to conduct due diligence into the company’s financial affairs.
The company’s highly lucrative real estate site Domain seems to be creating all the new interest. There are plans to spin Domain into its very own company and analysts believe its value has been grossly underestimated by TPG and Hellmen & Friedman. There have been reports that Domain Co. going it alone sans the poor performers of the Fairfax family could be worth as much as $3 billion on its own.
According to today’s The Australian Financial Review, Morgan Stanley valued Fairfax at about $1.20 a share back in February. However, the possibility of Domain going it alone means the shares would be more likely worth $1.50 – valuing all of Fairfax at just shy of $3.5 billion or some $600 million more than the current offers on the table.
However, as the AFR is reporting, not everyone is as optimistic as Morgan Stanley’s assessment. Deutsche Bank valued Fairfax Media at no more than $1.05 a share, while CITI has said both the bids for the business represent good value.
It’s expected that both TPG and Hellmen & Friedman will likely up their offers for the business in the coming days.