The bidding war for The Daily Telegraph reached a sudden and unexpected finale yesterday when the Barclay brothers announced they had agreed a £260m deal to buy the global newspaper group headed by the troubled media mogul Conrad Black.
The reclusive billionaire brothers, whose interests range from the Ritz hotel in London to Littlewoods stores, said they had reached an "irrevocable agreement" to take over Hollinger Inc, giving them control of the world's third largest group of titles, including The Daily Telegraph and The Sunday Telegraph and The Spectator magazine.
The agreement by Lord Black of Crossharbour to sell up, signed at midnight on Saturday in New York, came just hours after the peer's fortunes took a further dive for the worse with the announcement he was being sued by his own company, Hollinger International, for a catalogue of alleged unauthorised payments worth more than $200m (£118m). Lord Black, 59, was also summarily sacked as the company's non-executive chairman.
Under the complex structure of Lord Black's newspaper empire, Hollinger Inc, based in Toronto, had been used by the peer to control Hollinger International, a separate holding company that oversees the newspaper group.
The deal, which gives the Barclay brother's 73 per cent of the voting rights in Hollinger International, is still dependent on the agreement of other shareholders and will be closely scrutinised by America's powerful financial watchdog, the Securities and Exchange Commission, overseeing a separate inquiry into the alleged scandal.
It is also likely to be examined by Britain's new media watchdog, Ofcom, to ensure it does not infringe newspaper ownership rules.
Sir David Barclay who, along with his twin Sir Frederick, has built a business empire with annual revenues of £3.9bn, said he was confident that the deal, which makes the pair second only to Rupert Murdoch in their share of the national newspaper market, would bring an end to months of damaging publicity surrounding the media group.
Sir David said: "We believe this continued media controversy is significantly harming the public image and stock price of Hollinger International and undermining its credibility in the financial markets.
"As part of the acquisition, the negative media attention should cease."
The selling price secured by the brothers, whose current British newspapers include The Scotsman, Scotland on Sunday and The Business, is likely to be viewed by the financial markets as a bargain.
Before the current controversy, the Telegraph titles alone had been valued at £600m.
The deal also cuts short the ambitions of other media giants which had been expected to challenge for the Telegraph titles, including Associated Newspapers, owners of the Daily Mail, and Richard Desmond, the owner of the Daily Express and joint proprietor of the London print works where the Telegraph titles are produced. George Jones, the political editor of The Daily Telegraph, said the new owners would also be more acceptable to Downing Street than any of the alternatives.
He said: "It is reassuring that, at a time when we are facing difficulty, there are people who want to buy the newspapers. I think they would probably be a more acceptable owner to the Government than possibly Richard Desmond or Associated Newspapers."
Ofcom said last night that it could not make any comment before a deal was finalised. But sources close to the negotiations said they did not expect significant difficulties.
In a statement, Lord Black said he was sorry to be selling. He said: "It will be distressing to part from the Telegraph newspapers, The Spectator, the Chicago newspapers and The Jerusalem Post, in particular. But these fine titles must not be hobbled any longer by the controversies and financial uncertainty. They will be in good and caring hands and we will be able to focus exclusively on resolving current legal and public relations concerns."
The lawsuit filed by Hollinger International accuses the peer and his former chief operating officer at the company and two holding companies of taking more than $200m in management fees and so-called non-competition payments by "various improper means" between 1993 and last year. The money is said to have been used to fund their lavish lifestyles.Reuse content