TPG Capital withdraws bid to take over Australia's Fairfax Media

TPG Capital withdraws bid to take over Australia's Fairfax Media

Fairfax's share price fell sharply - to a three-month low - following these latest developments.

CEO Greg Hywood confirmed that approach was being considered in a speech to a Sydney finance conference in May, and revealed that Fairfax was separating Domain from its Metro publishing division and would take close to a billion dollars in write downs as a result.

News of TPG's departure will see the shares down under $1 very quickly this morning.

With the private equity groups out of the picture, Fairfax is sticking with its original plan to spin off Domain. These were the complicated way Fairfax accounts for revenues between print and online assets especially in its prized Domain business, and concerns over the lack of transparency over estate agency commissions in the P&L.

In a trading update to the market this morning, Fairfax said its overall group revenues are around 6 per cent below past year for FY H2. The takeover proposals followed years of job cuts and asset writedowns at Fairfax, whose shares had tumbled from a pre-financial-crisis high amid disruption of traditional media's revenue streams.

Fairfax had been the subject of a bidding war between TPG Capital and private equity peer Hellman & Friedman.

Fairfax chairman Nick Falloon reportedly received a letter from TPG on Sunday informing him of the abandoned its suggested$2.76 billion bid.

The company was valued at as much as A$2.9bil (US$2.2bil), after Hellman offered between A$1.225 and A$1.25 a share for Fairfax in May, compared with an earlier A$1.20-a-share cash offer from a TPG consortium that included Ontario Teachers' Pension Plan Board.

The forecast EBITDA range of between A$262 million and A$266 million is in line with the expectations of two analysts polled by Thomson Reuters I/E/B/S.

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