Control of Fairfax Media and three of the best known newspapers in the country looks like changing hands after a second US private equity group made a higher conditional offer, setting up an auction for the Sydney-based company.
San Francisco-based private equity group, Hellman & Friedman emerged on Thursday morning as a rival to TPG from Texas in trying to grab control of Fairfax in a bid worth over $3 billion, including debt.
Hellman and Friedman (H&F) has made an indicative proposal to acquire 100% of the shares in Fairfax for cash consideration at a price of $1.225 to $1.250 per share, assuming no dividends are paid.
The news saw Fairfax shares jump nearly 7% to $1.24, indicating that at last, in the eyes of investors, the competition for Fairfax could very well see a deal done.
That has forced the Fairfax Board to allow both parties to conduct due diligence on its accounts so that they can then firm up their offers and release them.
“There is no certainty that either proposal will result in offer for Fairfax, what the terms of any offer would be, or whether there would be a recommendation by the Fairfax Board, Fairfax CEO, Greg Hywood told staff in an internal memo yesterday morning, but having a second player made it impossible to deny both a look at the books (it was much easier to continue to deny TPG alone).
And Fairfax chairman Nick Falloon told the ASX in a statement 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.
Nick Falloon knows H&F and Brian Powers well having been a senior finance executive and Chief Financial Officer while Powers was running Cons Press and PBL for the Packers.
And based on past links Hellman and Friedman would be favourites for one very good reason – the history it has with Fairfax through its now Chairman Emeritus, Brian Powers who is a former chair of Fairfax back around the turn of the century, as well as being intimately involved in the last great fight for control of the company a decade earlier.
The appearance of H&F as a bidder for Fairfax means that former chair, Brian Powers is returning his past. He came to Australia in 1991 as part of the Tourang consortium that tried to buy Fairfax out of receivership.
Hellman & Friedman had joined with Canadian media baron Conrad Black (gone and has spent time in jail) and the late Kerry Packer to bid for the company. Packer dropped out of the syndicate, but Mr Powers was named as CEO Packer family’s private investment company Consolidated Press Holdings, as well as CEO of Publishing and Broadcasting in 1993. Malcolm Turnbull was a key player in those wheeling and dealings over Fairfax.
He quit in 1998 and immediately became chairman of the then John Fairfax Holdings. He left the Fairfax board in 2002. Powers had rejoined H&F in 1999 and went back to being a private equity shark. He has since become Chairman Emeritus of H&F.
He had previously served as Chairman of H&F and a member of the Investment Committee from 2009 to 2014 and as CEO and Chairman of the Investment Committee from 2003 to 2009.
Powers has extensive media experience, having served as a director of Axel Springer, the big german publisher(H&F had joined with the founding family in a buyout in 2003 and sold out in 2010. He was also a board member of the Germany’s largest TV group, ProSieben.
H&F was part of group that bought control in 2003. It sold its interest in 2007. H&F’s major media involvement is the ownership of Getty Images, which sells pictures and other materials to a wide range of media groups in Australia and around the world.
The last time H&F was said to have been interested in Australian media was back in 2014 when the Ten Network was being shopped around. H&F is claimed to have kicked the tyres and decided not to take an interest (lucky them with the Ten share price now at the 2014 equivalent of just 2.1 cents, more than 90% down on the price levels in 2014 (Ten shares are actually trading around 21 cents today, but that is after the one for 10 consolidation in 2016).
