Shareholders in Lloyds Banking Group could reap a windfall worth more than £500m early next year following a deal that will see it repaid loans in full by the owners of The Daily Telegraph.
Sky News has learnt Britain’s biggest high street lender will be in a position to write back more than £500m on the value of a £700m loan extended years ago to the Barclay family.
One banking analyst said the writeback, the precise size of which will be disclosed in Lloyds’ annual results next February, would pave the way for Lloyds to return a significant amount of capital to investors, potentially through a special dividend or share buyback.
Lloyds is expected to receive a total of £1.16bn early next week from the Barclays following an agreement between the family and RedBird IMI, an Abu Dhabi-based vehicle which is majority-funded by members of the Gulf state’s royal family.
RedBird IMI plans to convert a £600m chunk of the loan into shares in the Telegraph newspapers and The Spectator magazine if it gains regulatory approval for the deal.
On Thursday, Lucy Frazer, the culture secretary, confirmed a Sky News report that she was issuing a Public Interest Intervention Notice (PIIN) that will subject the transaction to scrutiny by Ofcom and the Competition and Markets Authority.
Ms Frazer is seeking the regulators’ responses before the end of January, after which the takeover of the broadsheet newspapers could be approved or blocked.
Image: A newsagent carries a pile of Daily Telegraph newspapers
Dozens of Conservative MPs, including the former party leader Sir Iain Duncan Smith, have called for the deal to face further investigation under national security laws.
The debt repayment to Lloyds is, however, unaffected by the PIIN.
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The bank has already given notice to the government of the debt repayment, with the funds expected to be transferred early next week.
The outcome will be a stunning one for Lloyds and its chief executive Charlie Nunn, who had rejected a series of partial repayment offers from the family lodged after the Telegraph’s holding company was placed into receivership during the summer.
In addition to the £700m value of the principal loan, the Barclays are paying more than £400m in interest which has accrued over many years.
“The writeback is pure profit for Lloyds and will flow straight to the bank’s bottom line,” the analyst said.
One person close to the situation said that Lloyds had written down the majority, but not all, of the loan’s original £700m value.
A writeback of over £500m is therefore expected to contribute a meaningful proportion of the bank’s 2023 annual profit.
Analysts say the company is already generating significant sums of excess capital and that the absence of a substantial acquisition would therefore give Lloyds’ board the freedom to return the Telegraph loan windfall to shareholders.
RedBird IMI, which is fronted by the former CNN president Jeff Zucker and funded in large part by Sheikh Mansour bin Zayed Al Nahyan, the owner of Manchester City, has pledged to preserve the Telegraph’s editorial independence.
The repayment of the Lloyds loan will trigger the dissolution of a court hearing in the British Virgin Islands to liquidate a Barclay company tied to the newspaper’s ownership, and temporarily put the family back in control of their shares in the broadsheet title.
However, the Barclays will be subject to restrictions imposed by the government which are expected to be outlined shortly.
A trio of independent directors, led by the Openreach chairman Mike McTighe, will remain in place while a public interest inquiry is carried out.
RedBird IMI’s move to fund the loan redemption has circumvented an auction of the Telegraph titles which has drawn interest from a range of bidders.#
The battle for control of The Daily Telegraph has rapidly turned into a complex commercial and political row which has raised tensions between the DCMS and the Foreign Office over Britain’s receptiveness to foreign investment.
Prospective bidders led by the hedge fund billionaire and GB News shareholder Sir Paul Marshall had been agitating for the launch of a PIIN.
Sky News revealed recently that Ed Richards, the former boss of media regulator Ofcom, is acting as a lobbyist for RedBird IMI through Flint Global, which was co-founded by Sir Simon Fraser, former Foreign Office permanent secretary.
The Telegraph auction, which has also drawn interest from the Daily Mail proprietor Lord Rothermere and National World, a London-listed local newspaper publisher, has now been paused until next month.
The original bid deadline had been shifted from 28 November to 10 December to take account of the possibility that Lloyds might be repaid in full by the Barclay family by December 1.
That bid deadline is now expected to be cancelled.
Until June, the newspapers were chaired by Aidan Barclay – the nephew of Sir Frederick Barclay, the octogenarian who along with his late twin Sir David engineered the takeover of the Telegraph in 2004.
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.
A Lloyds spokesman indicated that any capital distributions would be evaluated in the usual way by its board ahead of the bank’s annual results, but declined to comment further.
The owners of Hovis and Kingsmill, two of Britain’s leading bread producers, are in talks about a historic merger amid a decades-long decline in the sale of supermarket loaves.
Sky News has learnt that Associated British Foods (ABF), the London-listed company which owns Kingsmill’s immediate parent, Allied Bakeries, and Hovis, which is owned by investment firm Endless, have been involved in prolonged discussions about a combination of the two businesses.
City sources said this weekend that the talks were ongoing, but that there was no certainty that a deal would be finalised.
Bankers are said to be working with both sides on the talks about a transaction.
A deal could be structured as an acquisition of Hovis by ABF, according to analysts, although details about the mechanics of a merger or the valuations attached to the two businesses were unclear this weekend.
ABF is also said to be exploring other options for the future of Allied Bakeries which do not include a deal with Hovis.
If completed, a merger would unite two of Britain’s best-known ambient food brands, with Allied Bakeries having been founded in 1935 by Willard Garfield Weston, part of the family which continues to control ABF.
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Hovis traces its history back even further, having been created in 1890 when Herbert Grime scooped a £25 prize for coming up with the name Hovis, which was derived from the Latin ‘Hominis Vis’ – meaning strength of man.
Persistent inflation, competition from speciality bread producers and shifting consumer habits towards lower-carb diets have combined to impair the bread industry’s financial health in recent decades.
The impact of the war in Ukraine on wheat and flour prices has been among the factors increasing inflationary pressures on bread producers, according to the most recent set of accounts for Hovis filed at Companies House last year.
The overall UK bakery market is said to be worth about £5bn in annual sales, with the equivalent of 11m loaves being sold each day.
The principal obstacle facing a merger of Allied Bakeries, which also owns the Sunblest and Allinson’s bread brands, and Hovis would reside in its consequences for competition in the UK market.
Warburtons, the family-owned business which is the largest bakery group in Britain, is estimated to have a 34% share of the branded wrapped sliced bread sector in the UK, with Hovis on 24% and Allied on 17%, according to industry insiders.
A merger of Hovis and Kingsmill would give the combined group a larger share of that segment of the market, although one source said Warburtons’ overall turnover would remain larger because of the breadth of its product range.
Nevertheless, reducing the number of major supermarket bread suppliers from three to two would be a test of the Competition and Markets Authority’s approach to such industry-reshaping mergers at a time when the watchdog is under intense government scrutiny.
In January, the government removed the CMA chairman, Marcus Bokkerink, as part of a push to reorient Britain’s economic regulators around growth-focused objectives.
An industry insider suggested that a joint venture involving the distribution networks of Hovis and Kingsmill was a possible, although less likely, alternative to a full-blown merger of the companies.
They added that a combined group could benefit from up to £50m of cost savings from such a tie-up.
In its interim results announcement this week, ABF said the performance of Allied Bakeries had continued to struggle.
“Allied Bakeries continues to face a very challenging market,” it said.
“We are evaluating strategic options for Allied Bakeries against this backdrop and we expect to provide an update in [the second half of] 2025.”
In a separate presentation to analysts, ABF described the losses at Allied as unsustainable.
The company does not disclose details of Allied Bakeries’ financial performance.
Allied also owns Speedibake, an own-label bread manufacturer.
Hovis has been owned by Endless, a prominent investor in British businesses, since 2020, having previously been owned by Mr Kipling-maker Premier Foods and the Gores family.
At the time of the most recent takeover, High Wycombe-based Hovis employed about 2,700 people and operated eight bakery sites and its own flour mill.
Hovis’s current chief executive, Jon Jenkins, is a former boss of Allied Milling and Baking.
This weekend, ABF and Endless both declined to comment.
Aston Martin is steering a path towards a twin-pronged pay row with shareholders as it grapples with the impact of President Trump’s tariffs on car manufacturers.
Sky News can reveal that the influential proxy voting adviser ISS is urging investors to vote against both of Aston Martin Lagonda Global Holdings’ remuneration votes at next week’s annual general meeting.
The pay policy vote, which is binding on the company, has attracted opposition from ISS because it proposes significant increases to potential bonus awards to Adrian Hallmark, the company’s new chief executive.
“Concerns are raised regarding the increased bonus maximums, which are built upon competitively[1]positioned salary levels and do not appear appropriate given the company’s recent performance,” ISS said in a report to clients.
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Aston Martin is also facing a meaningful vote against its pay report for last year – which is on an advisory basis only – because of the salaries awarded to Mr Hallmark and other executive directors.
The company’s shares have nearly halved in the last year, and it now has a market value of little more than £660m.
Despite the ISS recommendation, Aston Martin will win the vote by virtue of chairman Lawrence Stroll’s 33% shareholding.
The luxury car manufacturer has had a torrid time as a public company and now faces the headwinds of President Trump’s tariffs blitz.
This week it said it would limit exports to the US to offset the impact of the policy.
Aston Martin did not respond to a request for comment ahead of next Wednesday’s AGM.
A financial wellbeing platform which counts the alcohol-free beer producer Lucky Saint among its clients has landed a £6m funding injection from a syndicate of well-known investors.
Sky News understands that Mintago, which was founded in 2019, will announce in the coming days that Guinness Ventures has jointly led the Series A round alongside Seed X Liechtenstein and Social Impact Enterprises.
Mintago, which also counts car rental firm Avis and Northumbrian Police among its customers, aims to help employees save and manage their money more effectively.
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A number of the start-up’s current investors, Love Ventures and Truesight Ventures, are also understood to have reinvested as part of the fundraising.
Image: The company, which counts Lucky Saint and Avis among its users, has finalised a Series A funding round
The company was set up by Chieu Cao and Daniel Conti, and claims to offer more salary sacrifice schemes than any other UK provider.
It also provides independent financial advice, a service for finding lost pension pots, retail discounts and GP services.
“We realised that organisations are crying out for the same help we provide their staff,” Mr Conti said.
“The benefits of providing that support impact everyone.
“When a company improves their salary sacrifice benefits engagement, they can save thousands in National Insurance Contributions, but their employees save too, easing the strain on their finances.”
The new capital will be used to develop additional products using artificial intelligence, according to the company.
“Mintago is enabling its customers to become truly people-centric organisations by giving them the tools to support their employees’ financial wellbeing,” Mathias Jaeggi, a partner at Seed X Liechtenstein, said.