US private equity giant TPG Capital has reportedly pulled out of the multibillion-dollar race to buy Fairfax Media.
TPG wrote to Fairfax chairman Nick Falloon on Sunday to tell him of its decision to walk away from the $A1.20($NZ1.26)-a-share offer it flagged in May, The Australian Financial Review reported.
Meanwhile, rival bidder Hellman & Friedman has also written to Fairfax indicating it's still interested in making an offer but has yet to submit a binding bid, according to the Fairfax-owned AFR.
TPG and Ontario Teachers' Pension Plan Board had offered $A2.76 billion for Fairfax, whose newspaper titles include The Sydney Morning Herald and The Age, as well as the online real estate website Domain.
San Francisco-based Hellman & Friedman quickly followed and placed a marginally higher value on the company of between $A2.82 billion and $A2.87 billion.
Both had been carrying out due diligence on Fairfax for much of the past month and were given until last Friday to submit formal offers.
But TPG decided to pull out amid concerns about the future valuations of Domain, The Australian reported.
"Fairfax had planned to spin off the assets but a serious professional investor in TPG has made clear the future of the business is not as bullish as the company has indicated," it said.
Comment was being sought from Fairfax and TPG.
Fairfax is a substantial owner of New Zealand media assets. In May the New Zealand Commerce Commission declined to grant the authorisation to the proposed merger of Fairfax New Zealand Ltd and NZME Ltd. That decision is being appealed.
The AFR said Fairfax was expected to announce on Monday that it would push ahead with plans to spin off the lucrative property classifieds business Domain from its other media assets, a move backed key investor Thorney Opportunities.
Thorney chairman Alex Waislitz wrote in an update to shareholders last week that the takeover approaches from TPG and Hellman & Friedman undervalued Fairfax.