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Lord Rothermere has dropped plans to use Qatari cash to help fund his bid for the Telegraph Media Group amid fears the UK government would oppose investors from the region.
Daily Mail and General Trust had been in talks with a Qatari investment group over it taking a minority stake in the owner of the Daily Telegraph as part of the bid.
Lord Rothermere’s DMGT is now drawing up a strategy to fund a bid for the UK newspaper group on its own, rather than using other investors to help boost its war chest, according to several people familiar with the situation.
Media analyst Claire Enders said bidders with backing from the Middle East could “struggle to get the UK government comfortable with them as owners of a politically important newspaper”.
UK bank Lloyds has kicked off the sale of the Telegraph and the Spectator magazine after taking control of the titles from the Barclay family earlier this summer. Interested investors have this week signed non-disclosure agreements ahead of the release of information packs.
Bidders including Lord Rothermere’s group have been finalising the make-up of their consortiums ahead of the first round of bidding later this month.
DMGT plans to keep the Telegraph editorially independent of the Daily Mail — and potentially in a separate company — to address likely concerns over two right-leaning newspapers falling into the hands of a single owner.
Analysts expect DMGT’s bid to face plurality and competition investigations by regulators regardless of financial backers.
DMGT declined to comment.
Lord Rothermere’s group confirmed in September it had “been approached and had talks with a number of Middle Eastern investors who have shown an interest in participating in a bid for the Daily Telegraph”.
DMGT said any deal would leave the UK publisher with the “majority of economic and equity risk, and the control needed to invest in the business and protect its editorial independence”.
DMGT sees a “strong potential to scale the Telegraph abroad, particularly in the US, just as we have very successfully done with the Mail”, a spokesperson has previously said. DMGT already oversees print advertising sales for the Telegraph.
Saudi and other Middle Eastern wealth funds have also been sounded out by potential bidders. The Barclay family has made repeated attempts to take back control of the newspaper this summer with a recent £1bn offer to buy back the majority of the debt backed by a member of the Emirati royal family and the First Abu Dhabi Bank.
A bid backed by Abu Dhabi could face scrutiny by the secretary of state through a public interest intervention notice (PIIN). A spokesperson for the Barclay family has said the proposals concern “the settlement of outstanding loans . . . there is no precedent and no basis for a PIIN being issued in relation to a debt transaction”.
Hedge fund boss Sir Paul Marshall is another contender for the Telegraph. Rupert Murdoch’s News UK, Czech billionaire Daniel Křetínský and Axel Springer have also registered interest.
Sir William Lewis, the former News UK and Telegraph boss, is now unlikely to bid following his appointment to lead the Washington Post.
David Montgomery’s National World, a listed company that owns the Scotsman and Yorkshire Post, is expected to raise money from investors in the public markets.
