It appears US private equity firm TPG’s takeover bid for Fairfax Media isn’t dead in the water, with Fairfax shareholders today suggesting they’d consider it if a further $1 billion was added to the offer.

Over the weekend TPG reportedly offered to buy Fairfax’s main mastheads and the lucrative real estate site Domain for $2.2 billion.

Yesterday, the deal appeared dead after shareholders widely rejected the offer as being too low and suggestions the deal “cherry picked” the best of Fairfax’s assets and left the rest. TPG apparently is not interested in Fairfax’s New Zealand operations, Macquarie Radio assets or SVOD Stan.

Now news out of the Fairfax camp is TPG’s takeover would be considered so long as the offer improved to $3.1 billion and included every part of the Fairfax business.

It’s believed splitting the company would doom the struggling parts of the business.

Fairfax’s own The Australian Financial Review (which TPG is keen to get its hands on) has today reported that TPG’s initial offer was probably low-ball and it never expected the board or shareholders to accept it.

“Most believe TPG’s opening bid, revealed by the Financial Review, is a low-ball offer and the Texas-based firm will come back with a renewed bid for the entire company should the Fairfax board reject the offer,” The AFR reported.

“While Fairfax’s board is still evaluating the offer, shareholders are understood to be unimpressed by the offer that leaves them holding all the less-valuable assets… They want private equity to take on the risk of those remaining assets and sell them off themselves.”