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Livewire Exclusive: Is Fairfax Media a Buy? Update

A couple of days ago I outlined our views on the recently revised bid from the TPG Consortium to acquire all shares in Fairfax Media (FXJ). Against many analyst’s expectations (many who thought a counterbid was unlikely) FXJ today received another non-binding proposal, this time on behalf of Funds affiliated with Hellman and Friedman. It now looks like a bidding war is set to ensue (albeit at this stage, a non-binding indicative one!).

How does today’s offer stack up?

Although the price of the new offer is slightly higher, with Hellman and Friedman offering between $1.225 and $1.25 in cash (up slightly from the $1.20 cash consideration offered by TPG) the offer terms are otherwise fairly similar. Specifically, a formal offer from Hellman and Friedman is subject to completion of due diligence, regulatory approval and as with the TPG offer, is at this stage indicative, preliminary and non-binding.

In response to both offers, Fairfax Chairman Nick Falloon has said that the board believes it’s in the best interests of shareholders to grant both parties due diligence (a sensible approach under the circumstances). Both deals however are still a long way from being a sure thing to proceed.

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