Psst, want to buy some Australian newspapers, going cheap?

In the next few months the Sydney Morning Herald, the Age of Melbourne and the Australian Financial Review are likely to end up on the market.

Fairfax, the Australian media company whose origins date back to 1841 and which owns the mastheads, is being stalked as a takeover target by US private equity firm TPG Capital.

TPG wants to get its hands on Domain, Fairfax's online property-listing business.

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This can be considered the jewel in the crown for Fairfax. Analysts estimate it makes up more than A$2 billion of Fairfax's total A$2.5b market capitalisation.

More importantly, it has a lot of growth potential.

Domain is Australia's number two real estate listings business, with REA Group having a market capitalisation of A$7b.

The Fairfax business is strongest in Sydney and Melbourne, where it was able to springboard off its two main newspapers. This means there is a lot of Australia where it is yet to penetrate and a huge amount of potential in the business.

And being lumped in with the traditional print assets, as Domain is under the current Fairfax structure, means it is undervalued by the market. Its value could be expected to rise immediately if it were a stand-alone entity.

In fact, fund manager Madeleine Beaumont of BlackRock noted at an investment conference late last year that a few years ago when REA Group was producing the same sort of profits that Domain is now, it had a market value of A$3b.

This is why Fairfax is considering spinning it off into a separate firm and why TPG is so keen to get its hands on Domain before this happens.

That leaves the question of what happens to Fairfax's other assets under a TPG takeover, and a fire sale is the most likely scenario. In fact, TPG is believed to have been already trying to line up buyers for the other parts of the company.

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A recent sum-of-the-parts valuation by Credit Suisse gives a few clues to how this would go.

It puts a total value on Fairfax of A$2.58b, with Domain making up far and away the largest portion at A$2.18b.

The TV streaming service Stan is worth A$200 million, radio network Macquarie A$89m and the regional newspapers A$83m. These should all be relatively easy to sell.

TPG will be back and it can't wait too long and risk Fairfax selling off Domain and seeing the opportunity disappear.

To the Metro Media assets - those mastheads on which Fairfax was built - Credit Suisse ascribes a value of zero.

This is probably pessimistic. The papers are still producing cash and, as Fairfax's recent about face on the imminent end of printed news shows, they have a few years left in them.

They won't be giving the papers away, but they won't be holding out for a big price either. Nine Entertainment, the TV network which has previously explored a merger with Fairfax, is a possibility. Where newspapers remain at the centre of Fairfax, even if they aren't producing much of the profits any more, under this scenario they would end up playing second fiddle to the TV stations.

TPG is believed to have amassed a 4.9 per cent stake in the business. The level is significant because it falls below the 5 per cent threshold where shareholders have to make themselves known.

Last week the private equity firm let it be known that it had "cooled" on the idea of a takeover of Fairfax and that no bid was "imminent".

We shouldn't read too much into that - imminent can mean anything.

TPG's comments are all part of the takeover dance, where on the one side they try to set shareholder and market expectations of a low bid and on the other side shareholders try to talk up the price. We have already seen fund managers with stakes in Fairfax say it's worth as much as A$1.50 a share.

That's a long way above the current share price of A$1.02 and a long way above TPG's supposed offer price of A$1.15 a share it had been rumoured to be considering.

Whatever TPG says about having "cooled" there is no doubt that it is serious about the takeover. It is believed to have already lined up debt to fund the bid.

Fairfax shares spiked as high as A$1.10 last week as takeover speculation mounted and are up a long way from below A80c last November.

The takeover dance is only just beginning. TPG will be back and it can't wait too long and risk Fairfax selling off Domain and seeing the opportunity disappear.

There will be others running the rule over Fairfax to get their hands on Domain because there is so much money to be made from this asset. Like TPG they will be in a hurry to get there before Fairfax sells it off.

Fairfax and its venerable mastheads are undoubtedly in play.