Fairfax Shares Soar – Takeover Bid Good News for Investors

Fairfax Media Ltd [ASX:FXJ] investors finally received some good news. A renewed takeover bid from TPG Capital and Ontario Teachers’ Pension Plan came yesterday, sending the share price up 7%.

The new bid, at $2.76 billion, would see a cash buyout of Fairfax shares at $1.20. A price the company hasn’t traded at for six years.

TPG has been hunting for control over the popular real estate site Domain. Going as far as privately meeting Domain boss Antony Catalano weeks before talks with the Fairfax board. The other main assets being: The Age, Sydney Morning Herald and Australian Financial Review.

The deal is likely to draw attention from politicians and the Foreign Investment Review Board, as TPG will need to show commitment to maintaining these key publications.

Is the Fairfax Share price at $1.20 enough?

Fairfax closed at $1.14 yesterday due to the new bid, as the board will look to shareholders for approval. Some are pushing for a price closer to $1.30. As one investor with a 6.1% stake said, the deal undervalued Fairfax.

It seems only a matter of time before a deal is struck. Which should bode well for investors who will have a chance to exit the embattled company at a premium.


Ryan Clarkson-Ledward,

Money Morning

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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