As Fairfax shares hit an all-time low, some shareholders are pushing for the Australian media company to sell down its majority stake in Trade Me, according to a story in the Fairfax-owned Australian Financial Review.
Others activist shareholders are pushing for a company break-up, the AFR says.
Meanwhile, Bloomberg reports Fairfax has become an attractive target for a leveraged buyout.
Speculation has been fuelled by Fairfax shares [ASX:FXJ] falling to an all-time equal low of 58 cents yesterday (they were flat at that level in late Thursday trading).
The debt-laden Australian company's stock has now lost 87% of its value over the past five years.
According to Royal Bank of Scotland analysis, Fairfax now trades at a 59% discount to the $A3.3 billion of its six business units.
Some shareholders are pushing for a new company to be spun off that would hold Fairfax's large metro newspapers. The group's radio stations could also be sold.
Fairfax bought Trade Me for $720 million to diversify its revenue as classified advertising evaporated from newspapers.
In December last year, it floated 33% of the auction site in a bid to pay down around $A1.5 billion in debt.
Fairfax's remaining stake in Trade Me is valued at around $A790 million.
The potentially diluting effect of more Trade Me shares hitting the market comes on top of analyst fears that Fairfax could mount a fresh raid on Trade Me's balance sheet, loading up the subsidiary with more debt or related party loans.
At the time of its December IPO, Trade Me - which is cashflow positive in its own operation - was saddled with $166 million in debt from the wider Fairfax group.
Trade Me true believes will be looking to its founder, Sam Morgan, who now holds a Fairfax board seat, to fight its corner.
For its half-year to December, Fairfax reported a 44% fall in net profit to $A172.9 million on revenue that fell 7.7% to $A1.2 billion.
Trade Me was a rare bright spot, with a 12.7% increase in revenue to $67.3 million and ebitda up 9% to $52 million.
Fairfax’s New Zealand media division, which includes The DominionPost and Stuff, saw revenue fall 8% to $226.7 million and ebitda slide 21.5% to $40.9 million.