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US private equity giant TPG has teamed with a Canadian pension fund to make a A$2.2bn ($1.6bn) bid for Fairfax Media’s real estate business and its main newspapers, including the Sydney Morning Herald, Australia’s oldest title.

The TPG consortium, which includes Ontario Teachers’ Pension Plan Board, plans to break up the Australian media group, which is struggling to cope with falling circulation and advertising revenues amid heightened digital competition. It also plans to buy Fairfax’s fast-growing Domain real estate unit and its metropolitan newspapers and spin off a range of additional media assets, including an online streaming network Stan and its New Zealand media business.

Fairfax said in a statement to the ASX on Monday it was reviewing the unsolicited offer.

“The Fairfax board notes there is no certainty that the indicative proposal is capable of being implemented due to the complexity involved in splitting the businesses. The proposed split of businesses may not optimize shareholder value,” said Fairfax.

Fairfax said the TPG consortium is offering A$0.95 cents per share for Domain, the newspapers and some digital ventures. Fairfax shareholders would retain Fairfax’s Stan streaming service, the New Zealand media business, as well as Fairfax’s existing debts, in a separate listed vehicle. TPG has valued these businesses at A$0.25-0.30 per share.

Fairfax shares closed at A$1.06 on Friday. It has a market capitalisation of A$2.44bn.

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