The prospect of a bidding war for Fairfax Media between two US private equity funds has driven its shares to a fresh six-year high.
San Francisco-based Hellman & Friedman lodged an indicative cash offer of between $1.225 and $1.25 per Fairfax share late on Wednesday, valuing the newspaper publisher at between $2.82 billion and $2.87 billion.
It trumps the improved $2.76 billion bid lobbed by TPG Capital and Ontario Teachers' Pension Plan Board on Monday.
The new bid pushed Fairfax shares as high as $1.24 on Thursday, their best value since May 3, 2011.
Fairfax will now open its books to both parties for due diligence, to see whether an "acceptable binding transaction can be agreed" for the whole company.
"The Fairfax board appreciates the support shareholders have demonstrated for Fairfax's current strategy and the potential separation of the Domain Group," chairman Nick Falloon said in a statement.
"We have carefully considered the indicative proposals and believe it is in the best interests of shareholders to grant both parties due diligence."
The TPG-led consortium initially offered $2.2 billion for parts of Fairfax, including its money-spinning Domain real estate classified business and flagship newspapers including The Sydney Morning Herald and The Age.
It then returned with an all-cash bid of $1.20 per share for the whole company, which analysts said indicated an intention to subsequently offload the parts of the business in which it had no interest.
That would include regional newspapers and Fairfax's 50 per cent stake in local Netflix rival Stan.
TPG's Australia and New Zealand boss, Joel Thickins, will appear before a Senate inquiry into the future of public interest journalism in Melbourne on Friday afternoon to be quizzed by federal politicians.
Hellman & Friedman's bid is also for the whole company.
Morningstar analyst Brian Han, who flagged the possibility of a rival to TPG prior to the announcement of the second bidder, said expectations of a relaxation of media ownership laws may encourage such a strategy.
"The possible change in the regulatory landscape also presents Fairfax with options, either as a target for another suitor or to turn itself into an acquirer," Mr Han said in a note to investors on Wednesday.
Former Fairfax chairman Brian Powers is senior advisor and chairman emeritus at Hellman & Friedman.
The Australian Financial Review, which is owned by Fairfax, reported that Mr Powers is understood to be involved in the deal, and to have a good working relationship with current Fairfax chief executive Greg Hywood.
In 2014, Hellman & Friedman was linked with a bid for the Ten Network.
Any formal, board recommended takeover offer for Fairfax would require approval from its shareholders, the Foreign Investment Review Board and New Zealand's Overseas Investment Office.
Fairfax shares closed up eight cents, or 6.9 per cent, at $1.24.
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