The proprietor of Australian newspapers together with the Sydney Morning Herald is in takeover talks with a North American personal fairness consortium.
TPG Capital and the Ontario Lecturers’ Pension Plan need to purchase components of Fairfax Media together with its newspapers and property promoting arm, Area.
A deal might be value as a lot as A$2.5bn (£1.4bn).
Nonetheless, loss-making Fairfax mentioned the provide “could not optimise shareholder worth”.
It additionally mentioned the proposal could not get off the bottom “given the complexity concerned in splitting the companies”.
A deal would additionally want approval from the federal authorities’s International Funding Assessment Board.
Fairfax, which additionally publishes The Age and the Australian Monetary Assessment, posted a lack of A$893m final 12 months because it struggled with plunging print promoting income and newspaper gross sales.
Final week journalists on the Sydney Morning Herald and The Age in Melbourne went on strike for every week in protest after administration introduced extra job cuts.
Nonetheless, the Area division, which accounts for half of Fairfax’s income, is rising strongly and the corporate desires to spin it off and retain a majority stake.
Area is Australia’s second-biggest actual property web site after one owned by Rupert Murdoch and is valued by analysts at about A$2bn.
According to Fairfax, the consortium has supplied 95 cents a share for Area, together with the metropolitan newspapers, an occasions enterprise, and a start-up investing arm.
That would depart present Fairfax shareholders with belongings together with newspapers in regional Australia and New Zealand, in addition to stakes within the Macquarie Radio Community and Stan, a video-streaming service.
Shareholders would even be left with present debt.
Lee Mickelburough, of Henderson International Buyers, which owns about 5% of Fairfax shares, mentioned: “It is a troublesome construction to say that we get 95 cents for the nice enterprise and also you get to maintain the debt for the transition companies. It is cheeky, the way in which they’ve structured it.”
Shares in Fairfax gained 2.four% in Sydney on Monday following information of the bid, valuing the corporate at about A$2.5bn.