US private equity firms bid for Australia newspaper empire

Fernando Stephens
May 18, 2017

The media giant received the indicative, preliminary and non-binding proposal from Hellman and Friedman last night.

The offer values the 186-year old company's shares at between 1.225 and 1.25 Australian dollars each, and is higher than a rival bid from a consortium of investors including TPG and the Ontario Teachers' Pension Plan.

The Fairfax board will invite both bidders to conduct due diligence.

Fairfax boss Greg Hywood was criticised for refusing to disclose his salary before a parliamentary inquiry this week.

The media company said there was no certainty either takeover proposal would result in an acceptable offer. "We also have a very serious concern, which we believe is something that needs to be kept in the public spotlight very strongly, that these types of private equity firms have a track record of taking cash out of businesses and not leaving cash to fund employee entitlements".

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Hellman & Friedman has raised US$35 billion (NZ$50 billion) since it was founded in 1984 and invested in 80 companies, including market researcher Nielsen, the Nasdaq stock exchange, Getty Images and the company that runs Formula One grand prix racing. The private equity firm is bringing more than financial clout to the table - its chairman emeritus is former Fairfax chairman Brian Powers. Australia's current Prime Minister Malcolm Turnbull, then an investment banker, was also an advisor on that deal.

Hellman and Friedman would pay between A$1.225 and A$1.25 for each Fairfax share, while TPG's proposal was priced at $1.20 a share.

"The Fairfax board appreciates the support shareholders have demonstrated for Fairfax's current strategy and the potential separation of the Domain Group".

Angela is a writer and journalist based in Sydney, Australia.

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