US private equity giant TPG Capital Sunday walked away from its offer to buy Fairfax Media, with reports saying the embattled Australian media empire would spin-off its property advertising business instead.
TPG and its partner Canada’s Ontario Teachers’ Pension Plan Board was in a bidding war with US investment firm Hellman & Friedman — former owners of US multimedia company Getty Images and German publisher Axel Springer — over Fairfax.
TPG made an offer in May of Aus$1.20 (92 US cents) a share that valued Fairfax at Aus$2.82-Aus$2.87 billion, while Hellman & Friedman proposed to buy the firm at Aus$1.225-Aus$1.250 a share.
But after a period of due diligence, TPG said it was withdrawing from the sale process.
“The TPG/OTTP consortium has today (Sunday) exited the Fairfax due diligence process and has elected not to proceed with an offer,” a TPG spokesman said in a statement.
“TPG thanks the Board and senior management team of Fairfax for the integrity and focus they have brought to the discussions.”
Hellman & Friedman on Friday sent a letter to Fairfax’s board saying it had not walked away, but did not submit a binding bid, Fairfax publication The Australian Financial Review reported.
Both offers were for the entire firm, which includes mastheads The Sydney Morning Herald, The Age and Financial Review, the lucrative property advertising Domain Group and its events and digital business units.
Without any binding offers, Fairfax was expected to end the buyout process Monday and instead announce plans first flagged in February to spin-off Domain, the Financial Review added.
Fairfax had previously said it wanted to list Domain as a separate entity while retaining up to 70 percent of its shares.
Like its global peers, Fairfax has slashed jobs and costs owing to falling circulation and advertising revenue.
But Domain has fared better, with chief executive Greg Hywood telling a business conference in May that revenues jumped 10 percent in the first 17 weeks of this year.
The group is the main rival in Australia to News Limited, Rupert Murdoch’s Australian empire, which is also suffering from falling revenues.