Mining magnate Gina Rinehart is likely to succeed in wresting control of Fairfax Media, but it could take at least six months of manoeuvring, an academic says.
Rinehart's company Hancock Prospecting Pty (HPPL) on Monday said unless Fairfax offered her board positions without "unsuitable conditions", she would be unable to assist Fairfax at this time.
"Hancock Prospecting may hence sell its interest, and may consider repurchasing at some other time," HPPL said in a statement.
UNSW Australian School of Business lecturer Michael Peters says some people will ask questions if the largest shareholder of a business walked away and the share price falls, only to have the same investor reappear to buy the shares.
Rinehart holds about 18 per cent of Fairfax stock and she is seeking as many as three board seats.
But on Wednesday Fairfax chairman Roger Corbett knocked back a request from Rinehart for a board seat, saying the board could not reach agreement with her on the issue of Fairfax's charter of editorial independence and other board governance principles.
Existing directors are keen for her to sign a charter of editorial independence before any offer of a board position is made.
"It's got a minimum of another six months to play out, but I suspect she'll end up with the lot if the shareholders lose confidence," Peters told AAP.
He added that it would be unacceptable for Rinehart to threaten to sell her shares if she was not given board seats.
"Someone's obviously drafted it (the statement) so that the Fairfax directors sit back and say, wow, she'll be back," Peters said.
"It implies that (Fairfax) is facing annihilation and I'm here to save you.
"It does not say how this help may be delivered."
When any person bought shares in a company they were buying into the current arrangements, he said.
Any substantial new shareholder is entitled to ask for a seat on the board, but if they are knocked back they can ask the shareholders for this privilege.
If the corporate regulator, the Australian Securities and Investments Commission (ASIC), pursued the case, Rinehart could argue that Fairfax had refused her help as a major company restructure takes place.
Fairfax recently announced a major restructure involving the loss of 1900 jobs, slimmed down metro newspapers and a heavy focus on digital publishing.
ASIC needs to consider whether Rinehart's actions will benefit the company as a whole.
However, it's understood that at this stage ASIC is not concerned by Rinehart's statement.
Analysts say Rinehart could effectively take control of Fairfax with a stake of more than 25 per cent.
But under corporations law and continuous disclosure rules, it would be difficult to prove that the share price had been driven down prior to a takeover offer.
It's also unlikely that minority shareholders would pursue a class action against a Hancock Prospecting takeover because cash would be a more attractive result than litigation.
A capital raising was also unlikely.
An ASIC spokesman said the regulator had no comment about the case.
A Hancock Prospecting spokesman was unavailable for comment.
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