It was the hottest rumour over the weekend, and speculation of private equity firm TPG’s offer for Fairfax Media appear to be getting stronger.
As reported on B&T over the weekend, the US company had apparently offered Fairfax upwards of $2.5 billion for its major mastheads and its highly profitable real estate site Domain. Apparently, it wasn’t interested in the company’s New Zealand operations, its stake in Macquarie Media Radio or the SVOD JV Stan.
A report in today’s Fairfax Media has suggested if the deal were to go ahead, the parts of the business TPG did want would form a separate company to be called “Domain Co”. The unwanted parts would apparently remain under the Fairfax name.
It is understood Fairfax bosses met over the weekend to consider the TPG offer that includes offering 95 cents per share to create Domain Co.
In a statement to the ASX this morning, Fairfax said the consortium included the Ontario Teachers Pension Plan alongside TPG.
The Fairfax article noted, “the conditions include due diligence, shareholder approval and the nod from the Foreign Investment Review Board”.
In a statement, Fairfax said: “The Fairfax board notes that there is no certainty that the indicative proposal is capable of being implemented given the complexity involved in splitting the businesses. This proposed split may not optimise shareholder value.”
Other conditions included: Domain making a pre-tax profit of $115 million, its mastheads making a combined pre-tax profit of $34 million, that the consortium buys Domain Co free of both cash and debt; and that it has the full support of the board.