Fairfax had been the subject of a bidding war between TPG Capital and private equity peer Hellman & Friedman.
"TPG has today exited the Fairfax due diligence process and has elected not to proceed with an offer", a spokesman said in a statement.
A spokesperson for Fairfax was not immediately available for comment.
TPG on Sunday confirmed reports it had pulled out of the race to buy the owner of newspaper titles including The Sydney Morning Herald and The Age, as well as lucrative online property classifieds business Domain after spending a month examining Fairfax's books. They closed 8.3% lower at A$1.10 last Friday.
Fairfax shares will slide this morning after United States private equity giant, TPG abandoned a bid, and Hellman and Friedman failed to lodge an offer by last Friday.
Both TPG and Hellman & Friedman had a deadline of last Friday to make formal offers after flagging their initial interest in May. The takeover proposals followed years of job cuts and asset writedowns at Fairfax, whose shares had tumbled from a pre-financial-crisis high amid disruption of traditional media's revenue streams.
"We are making excellent progress with preparations and have progressed all of the necessary regulatory approvals to meet our timetable by the end of 2017", Fairfax CEO Greg Hywood said.
Hellman's previous non-binding approach was worth up to $2.87 billion (valuing Fairfax at as much as $1.25 per share).
In a trading update to the market this morning, Fairfax said its overall group revenues are around 6 per cent below past year for FY H2.
The company expects its fully year 2017n EBITDA will be between $262 million and $266 million, with its results released on 16 August 2017.
Speaking on a shareholder call this morning, chairman Nick Falloon said the equity partners indicated neither wanted to bid for the whole company.