Rivals H&F and TPG vye for Fairfax

Australia’s Fairfax, which controls many of the newspapers across New Zealand, may have had its proposed merger with New Zealand Media and Entertainment (NZME) rejected but it appears to have other options. One of them is to be taken over either by New York-based private equity firm Hellman & Friedman (H&F) or by a consortium led by TPG.

Merger and acquisition newswire service, Mergermarket (which was then owned by the Financial Times Group) was sold in 2013 to private equity firm, BC Parners, for GBP 382 million. (Since then another sale is being sought, according to reports).

 Although the sale has not resulted in a reduction of headcount, over time it appears that numbers are dwindling, this is largely a result of natural attrition. With Fairfax, however, this is unlikey to happen, even if a merger takes place.

 This is what “The Australian” said.

 Fairfax shares have leapt 6.9pc to a six-year high of $1.24 after receiving a competing bid from global private equity firm Hellman & Friedman which valued the company at $1.225 to $1.25 a share.

The fresh bid values Fairfax (FXJ) at $3 billion, slightly higher than the revised $1.20 all-cash offer made by TPG and the its partner the Ontario Teachers’ Pension Plan on Monday.

The publisher’s board has said it will allow both Hellman & Friedman and TPG to carry out due diligence as a potential bidding war for the company emerges.

H&F is based in San Francisco and New York and is an established media investor.

The firm counts as its senior adviser and chairman emeritus Brian Powers.

Mr Powers is the former Fairfax chairman and managing director of the Packer family’s Consolidated Press and Publishing and Broadcasting.

The private equity firm joined with Packer and Conrad Black in an attempt to buy Fairfax when it was sold out of receivership by ANZ in 1991.

It is understood H&F are being advised by Goldman Sachs, King and Wood Mallesons and Newgate Communications.

Sources around the market are suggesting veteran investment banker Mark Carnegie could be quietly aiding Hellman & Friedman. Analysts have suggested the long-standing deal maker could be the adviser assisting the private equity firm given his history with both the publisher and Hellman and Friedman, for which he was previously the Asian and Australian representative.

Fairfax chairman Nick Falloon told the company’s shareholders to take no action, adding that in light of the two bids, the company would still press ahead with its plans to demerge Domain, the real estate publishing arm of the business.

“The Fairfax board appreciates the support shareholders have demonstrated for Fairfax’s current strategy and the potential separation of the Domain Group,” he said in a statement to the ASX.

Fairfax is advised by Macquarie Capital while TPG is advised by Credit Suisse.

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Thursday, 28 May 2020