TPG, OTPP to acquire Fairfax Media for $1.9bn

The transaction involves splitting the Australian media empire’s businesses including its three largest newspapers, The Sydney Morning Herald, The Age and The Australian Financial Review.

Private equity powerhouse TPG and Canadian pension fund Ontario Teachers’ Pension Plan have made an offer to acquire Australian media group Fairfax Media assets in a deal estimated to be about A$2.5 billion ($1.9 billion; €1.7 billion), according to a company statement on Monday.

The acquisition will require a complex breakup of the Fairfax Media empire. TPG and OTPP’s A$0.95 per share offer includes the company’s online real estate arm Domain, Australian metropolitan newspapers – The Sydney Morning Herald, The Age and The Australian Financial Review – as well as Events and Digital Ventures.

Under the proposal, there are Fairfax assets that the consortium does not want to acquire and which it has valued at A$0.25 to A$0.30 per share – Australian Community Media, New Zealand Media, Macquarie Media and TV and movie streaming service Stan. The bid said these would be combined in a separate and newly-listed company called New Media Company and would remain with Fairfax’s existing shareholders. The proposal also specifies that all financial indebtedness of Fairfax is to be transferred to New Media Company.

The TPG consortium proposes to fund the transaction through cash and debt, although the level of debt was unspecified.

TPG already owns part of Fairfax, acquiring 5 percent of the publisher for an undisclosed amount in March 2016. The firm is currently deploying its TPG Asia Partners VI fund, a 2013-vintage buyout vehicle that closed on $3.3 billion. It is also in the process of raising its seventh pan-Asia buyout fund targeting $4 billion, PEI data indicated.

A staff note from Fairfax chief executive Greg Hywood said the proposal was unsolicited, is non-binding and is subject to a number of conditions including shareholder and Foreign Investment Review Board approvals.

Fairfax Media is a 176-year old media company in Australia and New Zealand that comprises metropolitan, rural, regional and community mastheads. In Australia, mastheads include The Sydney Morning Herald, The Age, The Australian Financial Review, The Canberra Times, The Sun-Herald, and The Land. In New Zealand mastheads include The Dominion Post, The Press, The Sunday Star-Times, TV Guide, NZ House and Garden, New Zealand Fishing News and Cuisine, as well as agricultural publications. The company also has a Fairfax has a 54.5 percent interest in Macquarie Radio Network, following the merger of Fairfax’s radio business with Macquarie’s in 2015.