Former Telegraph owners table blockbuster £1bn bid to retake control
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.
Sir David Barclay (L) who died in 2021 and his twin brother Sir Frederick received knighthoods at Buckingham Palace in 2000.
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.
Lloyds and the Barclay family declined to comment.
Foreign state investors would be allowed to hold stakes of up to 15% in British national newspapers, ministers are set to announce amid a two-year battle to resolve an impasse over The Daily Telegraph’s ownership.
Sky News has learnt that the Department for Culture, Media and Sport could announce as soon as Thursday that the new limit is to be imposed following a consultation lasting several months.
The decision to set the ownership threshold at 15% follows an intensive lobbying campaign by newspaper industry executives concerned that a permanent outright ban could cut off a vital source of funding to an already-embattled industry.
It would mean that RedBird IMI, the Abu Dhabi state-backed fund which owns an option to take full ownership of the Telegraph titles, would be able to play a role in the newspapers’ future.
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RedBird Capital, the US-based fund, has already said it is exploring the possibility of taking full control of the Telegraph, while IMI would have – if the status quo had been maintained – forced to relinquish any involvement in the right-leaning broadsheets.
One industry source said they had been told to expect a statement from Lisa Nandy, the culture secretary, or another DCMS minister, this week, with the amendment potentially being made in the form of a statutory instrument.
Other than RedBird, a number of suitors for the Telegraph have expressed interest but struggled to raise the funding for a deal.
The most notable of these has been Dovid Efune, owner of The New York Sun, who has been trying for months to raise the £550m sought by RedBird IMI to recoup its outlay.
Another potential offer from Todd Boehly, the Chelsea Football Club co-owner, and media tycoon David Montgomery, has yet to materialise.
RedBird IMI paid £600m in 2023 to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.
That objective was thwarted by a change in media ownership laws – which banned any form of foreign state ownership – amid an outcry from parliamentarians.
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The Spectator was then sold last year for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Lord Gove, the former cabinet minister, as its editor.
The UAE-based IMI, which is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan, extended a further £600m to the Barclays to pay off a loan owed to Lloyds Banking Group, with the balance secured against other family-controlled assets.
Other bidders for the Telegraph had included Lord Saatchi, the former advertising mogul, who offered £350m, while Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding last summer amid concerns that he would be blocked on competition grounds.
The Telegraph’s ownership had been left in limbo by a decision taken by Lloyds Banking Group, the principal lender to the Barclay family, to force some of the newspapers’ related corporate entities into a form of insolvency proceedings.
The newspaper auction is being run by Raine Group and Robey Warshaw.
The DCMS declined to comment.
Burberry, the UK’s only global luxury brand, is to cut around 1,700 jobs worldwide over the next two years after reporting a steep financial loss.
The company lost £66m in pre-tax profit in the year ended in March as luxury goods sales fell across the world and the company weathered an “uncertain” environment and a “difficult macroeconomic backdrop”.
A year earlier, it recorded £383m in profit.
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It’s suffered in recent years with the share price falling to such an extent the business was removed from the FTSE 100, the index of most valuable companies listed on the London Stock Exchange.
Despite the financial performance, the company was upbeat, with chief executive Joshua Schulman saying “I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time”.
What cuts are being made?
The retailer did not specify any shop closures – in the past year, it closed 26 and also opened 26 stores – but did highlight shift cuts and consolidations.
“We don’t have a store closing programme, per see,” Mr Schulman told investors
The night shift at Burberry’s Castleford factory will be cut, it proposed, saying the shift has resulted in overproduction.
“Significant” investment in the facility will be made, however, as the ambition is to scale up British production “over time”, Mr Schulman said.
Changes to the retail network across the world will be made with shop staff being scheduled around “peak traffic”.
Burberry will be “realigning” shop staff, he said, “so that we can offer the best service” at the busiest times.
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There will also be a “simplification” of Burberry’s regional structure and a “rebalancing” of central and regional responsibilities to reduce duplication and “accelerate decision making” through the retail network.
But the majority of changes will be made to “office space teams” around the world, the CEO said.
Commercial and creative teams have already been consolidated, Burberry’s annual results said.
What’s gone wrong?
Aside from the global slowdown in luxury goods sales over recession fears, additional headwinds have come in the form of President Trump’s tariffs.
“Clearly, the external environment has become more challenging since mid-February”, Mr Schulman told investors.
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Tariff risks were higher than first planned, the annual results said.
It led the US market to be described by Mr Schulman as “choppy” since February when Mr Trump began announcing tariffs on Mexico, Canada and China, as well as on goods such as steel and cars.
Sales also fell in the Asia Pacific region by 16%, the results showed.
Criticism was levelled at the 2021 British government decision to withdraw VAT refunds for overseas visitors, “which has made the UK the least competitive destination in Europe for tourist shopping”, the results read.
“Business in our UK home market continues to be seriously impacted” by the move.
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