Bankers put the screws on 'Telegraph' bidding rivals

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The Independent Online

Lazard, the investment bank running the auction for the Telegraph group, is set to give its recommendation on who should win control of the newspapers to the board of Hollinger International today, but not before it turns the final screws on the bidders to eke out a higher price. The final value of the papers looks as if it could top £700m.

Lazard, the investment bank running the auction for the Telegraph group, is set to give its recommendation on who should win control of the newspapers to the board of Hollinger International today, but not before it turns the final screws on the bidders to eke out a higher price. The final value of the papers looks as if it could top £700m.

The board of Hollinger International is set to meet today to discuss Lazard's conclusions on the bids put forward by the Barclay brothers, the two entrepreneurs who own the Ritz hotels and the Scotsman group, and 3i, the private equity firm backed by the US media investment group VSS.

The meeting follows an intense weekend of legal wrangling by both bid teams on the technical aspects of their offers. But negotiations on price are set to go down to the wire, as Lazard was expected to go back to the bidders last night to demand a further rise in price. A source close to the negotiations said yesterday: "At the end of it all, Lazard will have to recommend the bid with the highest price."

The two bidders were asked to reconfirm their offers on Friday, leading to speculation that Lazard had made its recommendation by Friday night. But it appears that last-minute negotiations were entertained by Lazard and will go on until the Hollinger meeting begins. "Lazard will want to see what else they can squeeze out of the bidders," another City source said last night. The bids are at present expected to come in at about £650m, but including working capital within the Telegraph group is expected to push the final price over £700m.

A decision from the board may take some time and even then Lord Black, the disgraced peer who once ran the Telegraph group, may try to scupper the deal. He still controls more than 70 per cent of Hollinger's voting rights and has a 30 per cent stake in the business, and there are fears that he may block the bid. The Barclay brothers may have less to fear in this respect than 3i, whose bid is being led by David Montgomery, the former Mirror boss. The brothers agreed a deal to buy Lord Black's stake in Hollinger earlier this year. It later had to be abandoned after it was blocked by US courts.

People in the 3i camp were disgruntled over what they said was a lack of clarity from Lazard on the legal wrangles on the Hollinger side. Lord Black's claim on voting rights may have to be settled in court, which could delay any deal still further.

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