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Fairfax board warns on A$2.2b TPG proposal

NZ Newswire logoNZ Newswire 7/05/2017 By Marty Silk

Fairfax Media has warned an unsolicited A$2.2 billion proposal to split up its businesses is complex and "may not optimise shareholder value".

The consortium, led by US-based private equity giant TPG Capital and Canada's Ontario Teachers' Pension Plan Board, wants the struggling media company to split up its businesses.

Fairfax is going through a trying period with journalists on strike this week after last week's announcement that 125 jobs editorial jobs would be cut at The Age, The Sydney Morning Herald and the Australian Financial Review to save A$30 million.

Under the proposal, the TPG-led consortium would buy the Domain online real estate classified business, the Australian Metro Media including the Sydney Morning Herald and The Age, and the Events and Digital Ventures businesses.

TPG already has a stake in the Fairfax Media, after buying a five per cent interest in March.

Meanwhile, Fairfax shareholders would retain ownership of the Australian Community Media, New Zealand Publishing, Macquarie Media and the Stan streaming service.

Those businesses would be merged into a new ASX-listed company called New Media Co that would also take on 100 per cent of Fairfax's net debt.

The Fairfax board is currently reviewing the proposal, but says it is wary about the possible outcomes of a demerger.

"The Fairfax board notes that there is no certainty that the indicative proposal is capable of being implemented given the complexity involved in splitting the businesses," the board said in a statement.

"This proposed split of businesses may not optimise shareholder value."

Fairfax also warned that there was no certainty that a demerger would result in the consortium, or any other entity, making an offer for New Media Co.

"Regardless of any potential proposal, the Fairfax board believes that Fairfax has a very attractive future and that the company is well positioned to continue to deliver shareholder value," the company said.

"Fairfax is continuing to progress the announced potential separation of Domain Group."

Fairfax Media last week reported total group revenue in the 17 weeks to April 23 was down six per cent on the prior corresponding period.

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