Fairfax Media is at the centre of a bidding war after another US private equity firm weighed in with a better offer.

San Francisco-based Hellman & Friedman made an indicative cash offer of between A$1.225 and A$1.250 per share late on Wednesday, valuing the company at between A$2.82 billion ($3.02b) and A$2.87b ($3.07b).

This compares to the improved A$2.76b bid lobbed by TPG Capital and Ontario Teachers' Pension Plan Board on Monday.

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.

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"We have carefully considered the indicative proposals and believe it is in the best interests of shareholders to grant both parties due diligence," Fairfax chairman Nick Falloon told the Australian Securities Exchange.

The TPG-led consortium initially offered A$2.2b for parts of Fairfax, including its money-spinning Domain real estate classified business and its flagship newspapers.

It then returned with an all-cash bid of A$1.20, which analysts said suggested it intended to subsequently sell the parts of the business in which it had no interest.

Any formal, board recommended takeover offer would require shareholder approval and approval of both the Foreign Investment Review Board and New Zealand's Overseas Investment Office.

Fairfax shares were valued at A$1.16 ahead of Thursday's market open and hovering around their recent six-year price high.