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Fairfax shares jump on carve-up proposal

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Fairfax Media shares have jumped to a five-week high after the struggling company's board said it was considering an unsolicited $2.2 billion proposal to split up its businesses.

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A consortium led by US-based private equity giant TPG Capital and Canada’s Ontario Teachers’ Pension Plan Board wants to buy Fairfax Media’s Domain online real estate classified business, its Australian Metro Media businesses including the Sydney Morning Herald and The Age, and its Events and Digital Ventures businesses.

Under the proposal the remaining Fairfax businesses, including the Australian Community Media, New Zealand Publishing, Macquarie Media and the Stan streaming service, would be grouped under a new ASX-listed company called New Media Co, which would also take on 100 per cent of Fairfax’s current net debt.

Investors seem to be interested in the TPG proposal with Fairfax shares jumping 3.07 per cent, or 3.25 cents, to $1.09 by 1020 AEST on Monday – the highest level since March 30.

Earlier, the Fairfax board said it was reviewing the proposal, but that it was 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 has been going through a trying period with journalists on strike 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 the company $30 million.

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

– AAP

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