The former owners of The Daily Telegraph have tabled a blockbuster £1bn bid that they believe will end rival suitors’ hopes of buying the broadsheet newspapers.
Sky News has learnt that the Barclay family has lined up financing from Abu Dhabi investors to lodge a knockout offer that would repay the debt owed by their companies to Lloyds Banking Group, Britain’s biggest high street lender.
Insiders said the Barclay family’s latest proposal had been lodged in the last few days, in an attempt to derail an auction of The Daily Telegraph, The Sunday Telegraph and The Spectator current affairs magazine that was due to get underway as early as Monday.
An offer of £1bn would be expected to act as a serious deterrent to other potential bidders for the titles, who include the hedge fund billionaire Sir Paul Marshall, the German media giant Axel Springer and Lord Rothermere, the Daily Mail proprietor.
The Barclays’ latest offer came just weeks after a proposal valued at £725m was submitted to Lloyds, and underlines the family’s determination to regain ownership of two of Britain’s most influential newspapers.
Lloyds may seek to resist any pressure to formally terminate the broader Telegraph sale process immediately while it awaits proof of funding from the Barclay family.
City sources said on Monday that the ultimate source of the financing for its bid was unclear, although members of the Abu Dhabi ruling family including Sheikh Mansour bin Zayed Al Nahyan – the ultimate owner of a controlling stake in Manchester City Football Club – are understood to have been involved in the talks.
Ken Costa, the veteran City banker who advised the Barclay brothers on their purchase of the Telegraph in 2004 and counts the sale of Harrods to Qatar Holding among his other flagship deals, is acting as a strategic adviser to the family, according to people close to the process.
One insider said the Barclay family’s proposal was deliverable and carried no regulatory risk, unlike some potential alternative bids.
Nevertheless, there is likely to be close scrutiny from Ofcom, the media regulator, of a deal financed largely by overseas investors given the sensitivity of the ownership of the Conservative-supporting Telegraph titles gaining new backers in the year before a general election
In the last two months the family has lodged a series of proposals to repay roughly £1bn of debt it owes the high street bank, with most of those tabled at a significant discount to its face value.
Until June, the newspapers were chaired by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who along with late brother Sir David engineered the takeover of the Telegraph 19 years ago.
Lloyds had been locked in talks with the Barclays for years about refinancing loans made to them by HBOS prior to that bank’s rescue during the 2008 banking crisis.
In recent months, Sir Frederick has been embroiled in an acrimonious £100m court battle over his divorce settlement.
The Barclays previously owned the Ritz hotel in London, and in the last few months have also instructed bankers to sell Yodel, the parcel delivery group.
Houlihan Lokey, the investment bank, is also advising the Barclays on their efforts to regain ownership of the newspapers.
In the last few weeks, key details have emerged of other bidders’ efforts to wrest control of the broadsheet titles, with Sir Paul enlisting backing from fellow hedge fund billionaire Ken Griffin and advice from the former Daily Mail and General Trust chief executive Paul Zwillenberg.
National World, the listed vehicle run by former Mirror newspaper chief David Montgomery, has hired advisers to work on a bid, while the former Daily Telegraph editor William Lewis has also been canvassing potential backers.
Axel Springer, which publishes the German newspaper Die Welt, has also registered its interest in participating in the auction, which Goldman Sachs has been appointed to oversee.
A sale for the originally mooted valuation of £600m or more would trigger a substantial writeback for Lloyds, which wrote down the value of its loans to the Barclays several years ago.
The debt the family owes to Lloyds is also believed to include some funding tied to Very Group, the Barclay-owned online shopping business.
In July, Telegraph Media Group (TMG) published full-year results showing pre-tax profits had risen by a third to about £39m in 2022.
A successful digital subscriptions strategy and “continued strong cost management” were cited as reasons for the company’s earnings growth.
“Our vision is to reach more paying readers than at any other time in our history, and we are firmly on track to achieve our 1 million subscriptions target in 2023 ahead of our year-end target,” said Nick Hugh, TMG chief executive..
The sale will be overseen by a new crop of directors led by Mike McTighe, the boardroom veteran who chairs Openreach and IG Group, the financial trading firm.
Mr McTighe has been appointed chairman of Press Acquisitions and May Corporation, the respective parent companies of TMG and The Spectator (1828), which publish the media titles.