Daily Mail proprietor Rothermere in talks with investors over Telegraph bid

Business

The owner of the Daily Mail is in talks with prospective backers of a bid for The Daily Telegraph  - a deal that would underline its proprietor’s status among the most powerful figures in British media.

Sky News has learned that Lord Rothermere, chairman of both DMGT and its consumer division dmg media, is courting financial investors to support a bid for the Telegraph newspapers.

Lord Rothermere, who delisted DMGT early last year after striking a deal to take it private, is understood to be holding talks with funds based in the Middle East, among others.

City sources said this weekend that individual external investors would be unlikely to own more than 20% of the Telegraph titles if they formed part of a consortium with the Daily Mail proprietor.

In a statement issued on Saturday, a DMGT spokesman said: “We have been engaged with many parties over the possible synergies between DMG Media and the Daily Telegraph and have registered our interest with Lloyds [Banking Group] but we have no formal plans and there is no consortium.”

The statement represents the first formal confirmation of Lord Rothermere’s pursuit of an acquisition that he has coveted for many years.

Last month, Sky News revealed that the Telegraph titles’ holding company had picked Goldman Sachs, the Wall Street investment banking giant, to oversee the impending auction of one of Britain’s most prestigious newspaper publishers.

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Lloyds, which took control of the newspapers after a protracted and acrimonious negotiation with their former owner, the Barclay family, hopes to value them at about £600m.

An auction is expected to get underway in the autumn, with buyers sought for the newspapers as well as The Spectator, the current affairs magazine chaired by Andrew Neil, the veteran political broadcaster.

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Undated handout photo issued by the Daily Mail and General Trust of their chairman, Lord Rothermere

Lord Rothermere is said to be open-minded about acquiring The Spectator, although his priority is said to be buying the Telegraph titles.

One question will be whether a DMGT takeover of the right-leaning newspapers will trigger competition issues, although a media analyst said that such concerns were “probably surmountable”.

Nevertheless, Lord Rothermere is likely to require external financing to table a credible offer, according to industry sources.

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The identity of the funds with which he was in talks was unclear on Saturday.

To date, only National World, the regional newspaper publisher headed by David Montgomery, the industry veteran, has declared publicly its interest in bidding for the Telegraph.

Pre-tax profits rise by a third in 2022

Last month, 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 is to 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 was recently named as chairman of Press Acquisitions and May Corporation, the respective parent companies of TMG and The Spectator (1828), which publish the media titles.

Goldman’s appointment adds to a slate of professional advisers involved in determining the future of one of the UK’s most influential newspaper groups.

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Lazard, the investment bank, has been advising Lloyds on its options, while AlixPartners was appointed receiver over B.UK Ltd, a Bermuda-based entity, which ultimately controls the companies behind the Telegraph titles.

Lloyds had been locked in talks with the Barclays for years about refinancing loans made to them by HBOS prior to its rescue during the 2008 banking crisis.

A sale for £600m, or anywhere close to it, would trigger a substantial writeback for Lloyds, after it wrote down the loan several years ago.

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Sir Frederick Barclay

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 in 2004.

Sir Frederick has been embroiled in a £100m court battle over his divorce settlement.

The Barclays previously owned the Ritz hotel in London, and still own Very Group, the online retailer.

Sky News revealed last month that the family had also instructed bankers to sell Yodel, the parcel delivery group it owns.

Other prospective bidders include thehedge fund tycoon Sir Paul Marshall – who is also a big investor in GB News – and Czech businessman Daniel Kretinsky.

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