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.
Business
Vivergo: How US-UK trade deal could bring about collapse of huge renewable energy plant in Hull
The smell of yeast still hangs in the air at the Vivergo plant in Hull but the machines have fallen quiet.
More than 100 lorries usually pass through here each day, carrying 3,000 tonnes of wheat. It is milled, fermented and distilled. The final product is bioethanol, a renewable fuel that is then blended into E10 petrol.
This is a vast operation. It took several years to build, with considerable investment, but it is on the verge of closing down. Management and staff are holding out for a last-minute reprieve from the government but time is running out.
It’s been a turbulent journey. The plant was already being annihilated by US rivals, losing about £3m a month. Vivergo and Ensus, based in Teesside, blamed regulations that enable US companies to earn double subsidies.
They were pushing for regulatory change but then a killer blow: The US-UK trade deal, which allows 1.4 billion litres of American ethanol into the UK tariff-free (down from 19%).
“We’ve effectively given the whole of the UK market to the US producers,” said Ben Hackett, managing director at Vivergo.
“If we were to have the same support that the US industry has, if we could use genetically modified crops, we wouldn’t need that tariff. We would be able to compete. If we had the same energy costs. We wouldn’t need those tariffs.”
The government has the weekend to come up with a plan that could keep the business running. If it fails, Vivergo will begin issuing redundancy notices to its 160 staff.
Ben Hackett
It’s a devastating prospect for workers, many of them live in Hull and are nervous about alternative opportunities in the area.
Mike Walsh, a logistics manager who has been working at the plant for 14 years, said: “It’s not a great place to be at the moment. It’s a very well paid, very high-skilled role and they’ve (Vivergo) given everybody an opportunity in an area that doesn’t pay that well…. The jobs market isn’t as good as what people would like. So it does impact the local economy.”
He called on the government to “help us, save us, give this industry a future”.
His colleague Claire Wood, lead productions engineer, said: “I moved here after a career in oil and gas for 10 years, partly because I want to be part of the transition to renewable fuels. I can see so much potential here and it’s absolutely devastating to know that this place might be closed very, very shortly and that all that potential just goes away.”
Thousands more could be affected. Haulage companies may have to lay off truck drivers and farmers could also suffer a blow.
Vivergo makes bioethanol using wheat. That wheat is bought from farms from Yorkshire and Lincolnshire.
Claire Wood
The National Farmers Union has sounded the alarm, saying: “Biofuels are extremely important for the crops sector, and their domestic demand of up to two million tonnes can be very important to balance supply and demand and to produce up to one million tonnes of animal feed as a by-product.”
Another bioproduct is carbon dioxide. The gas can be captured and used to put the fizz in drinks or injected into packaging to preserve food.
If Vivergo and Ensus were to go, Britain would lose as much as 80% of its output of carbon dioxide. Supplies are already tight across Europe, meaning this decision could compound shortages across a range of sectors, from meat-packing to healthcare.
The industry is calling on the government to help. Vivergo says it needs temporary financial support but that the government must create a regulatory and commercial environment in which it can thrive.
It says rules that award double subsidies to companies that use waste product in their bioethanol must be changed. At present, these rules are being used by US companies that make ethanol from Uldr – a by-product of processing corn. They argue this is not a genuine waste product.
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Another option is to grow the market. Industry leaders are calling on ministers to increase the mandated renewable fuel content in petrol from 10% to 15% and for an expansion into aviation fuels. That would allow British companies to carve out a space.
The government has been locked in talks with the company since June.
It said: “We will continue to take proactive steps to address the long-standing challenges it faces and remain committed to a way forward that protects supply chains, jobs and livelihoods.”
However, the time for talking is almost over.
Mr Hackett said he had no idea how the government would respond but he was firm with his stance, saying: “In times of global uncertainty, losing that energy certainty and supply from the UK is a problem.
“I think what they’re missing out on is the future growth agenda. We’re the foundation on which the green industrial strategy can be built. We make bioethanol that today decarbonises transport. Tomorrow it will decarbonise marine. It will decarbonise aviation.”
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