A consortium led by private equity firm TPG has raised its takeover approach for Fairfax to $1.20 a share and is now proposing to buy out the entire firm.

Key points: Latest potential offer values Fairfax around $2.75 billion

Latest potential offer values Fairfax around $2.75 billion TPG in a consortium with the Ontario Teachers' Pension Plan Board

TPG in a consortium with the Ontario Teachers' Pension Plan Board Fairfax shares jumped as much as 8.4 per cent on news of the revised proposal

The offer values Fairfax around $2.75 billion and is a 12 per cent premium to the company's closing share price on Friday.

Fairfax shares jumped as much as 8.4 per cent to $1.16 in morning trade, and were worth $1.1475 by 12:30pm (AEST).

TPG's initial approach of 95 cents per share was for Fairfax's real estate advertising arm Domain and its major mastheads, the Sydney Morning Herald, The Age and the Australian Financial Review.

That deal would have left existing Fairfax shareholders with the firm's regional newspapers, a majority stake in Macquarie radio, a 50 per cent share in video streaming service Stan and the company's New Zealand assets.

CCZ Equities founder and long time media watcher Roger Colman said Fairfax shareholders are likely to be lured by the certainty of TPG's cash offer.

"I think this will get it over the line for the simple reason that the deterioration of Fairfax's operational performance is a greater concern to shareholders," he explained.

Mr Colman said that TPG's plan may be to "redevelop" Fairfax with a view to "re-listing it in a rejuvenated state", and is likely to be focused on the company's long-term future.

"[TPG] is not a half-yearly profit reporting business," he said.

"This is something that's going to be put away for a few years, redeveloped, rejuvenated and it duplicates a sort of attitude that Rupert Murdoch adopts to grinding away the opposition."

Fairfax board considering revised proposal

Fairfax's board said it is reviewing the revised proposal, but has noted that there is no guarantee it will lead to a firm offer or that the conditions, such as price, of a final offer will remain the same.

The company said it is continuing to progress its own plan to potentially separate the Domain real estate business from the rest of Fairfax.

In February, it announced a potential plan to separately list Domain on the ASX as early as later this year, with Fairfax to retain a majority stake.

The Fairfax board said shareholders do not need to take any action in response to the proposal, and it will provide an update once it has fully assessed the bid.

The proposal is also subject to a number of conditions, including foreign investment approval from both Australia and New Zealand, due diligence, and Fairfax shareholder approval.

The other major member of TPG's consortium is the Ontario Teachers' Pension Plan Board.