Fairfax Media will resume plans to spin off its real-estate listing arm Domain after two potential takeover bids for the company failed to eventuate before Friday’s deadline.
The Fairfax chief executive officer, Greg Hywood, said talks with private equity firms the TPG Consortium and Hellman & Friedman had now ended and his earlier plans to separate Domain, announced in February, would continue.
“Now this distraction is over it is back to business as usual,” Hywood said on Sunday. “As you know the bids from the two private equity players were unsolicited.
“But once we received the above market indicative bids we acted in the best interests of our shareholders and ran a process. It is common in these situations for indicative bids not to translate to binding bids.”
In a statement to the ASX Hywood said a complete financial update would be provided at the full-year results in August, but it was business as usual.
“We are making excellent progress with preparations and have progressed all of the necessary regulatory approvals to meet our timetable for completion by the end of 2017,” Hywood said.
After opening its books to two unsolicited potential bidders for the past five weeks, Fairfax did not receive a single bid. Neither firm gave a reason for their decision but the Fairfax chairman Nick Falloon told analysts “the complication of our business” may have played a part.
A spokesman for TPG said it had elected not to proceed with an offer. “TPG thanks the board and senior management team of Fairfax for the integrity and focus they have brought to the discussions,” he said.
In May, Fairfax received a $2.7bn offer from TPG Capital and Ontario Teachers’ Pension Plan, followed by a rival $2.87bn bid from Hellman & Friedman.
In a briefing with analysts on Monday, Falloon talked up the company’s strategy which includes reducing costs in the Metro Media division by losing one quarter of the workforce of the Sydney Morning Herald and the Age.
At the end of the financial year on Friday, dozens of journalists and photographers had their last day at the newspapers, provoking an outpouring of emotion in Fairfax newsrooms and ending a period which has seen 125 staffers depart.
The Metro Media division, which houses the major capital-city newspapers, is down 12%, and the regional and rural newspaper business is down 11%.
The only successful part of the business is Domain which is up by 10%, while overall the company’s revenue is down 6% at the end of the 2017 financial year.
The Fairfax board told the ASX the company had an attractive future and throughout the potential takeover process it had been business as usual including making progress with the separation of Domain.
“The board appreciates the support that shareholders have demonstrated for Fairfax’s current strategy,” Falloon said.
“That support has been communicated during this process with a strong desire for Fairfax to progress the Domain separation and to continue to execute on its plans.
“The Fairfax board believes the company is well positioned to continue to deliver substantial returns for shareholders into the medium and long-term future.
“Fairfax’s digital businesses are growing strongly and we have established plans for our traditional media businesses. With media reform expected later this year, Fairfax will actively look to maximise value given the strategically important businesses we own.”
While the company talked down the collapse of the TPG and Hellman & Friedman bids, saying they were unsolicited, the departure of the two potential bidders after they had access to the Fairfax books is of concern.
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