The Fairfax Media Limited (ASX: FXJ) share price is zooming higher today following yet another takeover offer, this time from Hellman & Friedman LLC.
Fairfax share price
Who is Fairfax?
Fairfax is the owner of newspapers like Sydney Morning Herald, The Age, Australian Financial Review and more. It owns Domain, the property portal rivalling REA Group Ltd's (ASX: REA) realestate.com.au. Fairfax also owns many regional newspapers and other media assets.
The TPG Takeover offer
A recent takeover offer led by private equity firm TPG Group proposed to buy Fairfax's Domain property business and its three main newspaper businesses, for 95 cents per share. In addition, shareholders stood to receive shares in a newly ASX-listed company that would house all the other assets currently owned by Fairfax.
The TPG Group consortium must have thought it was a buffet, where they could pick and choose the good stuff and leave shareholders with a lump of coal.
However, the TPG Group consortium returned on May 15th to offer shareholders $1.20 per share in cash for Fairfax's entire business, minus any dividends paid to shareholders. TPG Group's offer is subject to further due diligence and regulatory approvals.
The Hellman & Friedman LLC takeover offer
The latest offer, announced today by Fairfax, has set the price a little higher, between $1.225 and $1.25 per share, in cash.
Both the Hellman & Friedman and TPG Group offer is "indicative, preliminary and non-binding". That means, there's no guarantee they'll actually follow through with their proposals.
Fairfax said it will allow both firms to do their research (due diligence), in the hope of securing a binding proposal.
"The Fairfax Board appreciates the support shareholders have demonstrated for Fairfax's current strategy and the potential separation of the Domain Group," Fairfax Chairman Nick Falloon said. "We have carefully considered the Indicative Proposals and believe 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."
What now?
It's always good to have more than one takeover proposal because it can improve the odds of shareholders receiving a better price for their shares, or a deal falling through. However, the Hellman & Friedman offer is only slightly better than the TPG Group offer, which I find underwhelming.
It is anyone's guess as to what will happen next but after years of suffering through poor returns, I might be tempted to take some money off the table if I were a Fairfax shareholder.
