Abu Dhabi-backed RedBird IMI withdraws from Telegraph deal

Abu Dhabi-backed RedBird IMI on Tuesday said it would sell the Telegraph after it scrapped its acquisition of the right-leaning newspaper group because of the UK government’s intervention which meant the deal was “no longer feasible”.

RedBird IMI effectively took control of The Telegraph and the Spectator magazine in December when it repaid a debt owed by then-owner the Barclay family to Lloyds Bank, including a GBP600m ($753m) loan against the titles.

Regulatory hurdles and government intervention

But the acquisition, which already faced a lengthy regulatory inquiry, was dealt a blow last month when Britain said it would stop foreign governments owning newspapers.

“RedBird IMI has today confirmed that it intends to withdraw from its proposed acquisition of the Telegraph Media Group and proceed with a sale,” a RedBird IMI spokesperson said.

“We have held constructive conversations with the government about ensuring a smooth and orderly sale for both titles.”

RedBird IMI, led by former CNN executive Jeff Zucker, is backed by Sheikh Mansour bin Zayed Al Nahyan, UAE’s Vice President, Deputy Prime Minister and Chairman of the Presidential Court, who also owns the Manchester City football club.

The government issued a notice in December stopping RedBird IMI transferring ownership of the newspaper or changing its management and board while it investigated the deal.

Sale to go ahead of The Telegraph

Culture Secretary Lucy Frazer said on Tuesday she would now allow RedBird IMI to conduct an orderly sale of the titles after it had signalled its intention to withdraw.

RedBird IMI said its focus was on securing the best price for the titles, which are close to the ruling Conservatives, reported Reuters.

“The Secretary of State referred The Telegraph side of the bid to Ofcom and the CMA (via an intervention notice),” the IMI Red Bird statement said, reported The National.

“She also made a regulatory order that put the completion of the option to acquire The Telegraph on hold, pending the outcome of the regulatory process. The Secretary of State has concluded that it would be appropriate to proceed by granting RedBird IMI derogations from the regulatory order so that we can on-sell the option to acquire The Telegraph.

“Whilst the Secretary of State’s intervention notice and regulatory order did not relate to The Spectator, RedBird IMI also intends to on-sell the option to acquire The Spectator,” the statement added.

Parties previously interested in the assets include hedge fund boss Paul Marshall, Daily Mail owner DMGT as well as private equity buyers.