Hollinger mulls poison pill to block Barclays' Telegraph bid

The Barclay brothers' takeover of The Daily Telegraph looked in fresh doubt last night after it emerged that the board of Hollinger International, the paper's parent company, is threatening to stymie their deal by launching a "poison pill" defence.

Hollinger International is seeking to destroy the attraction of Lord Black of Crossharbour's controlling stake in the company by diluting it with the issue of vast numbers of new shares. Lord Black has agreed to sell the 30 per cent stake to the Barclay brothers, owners of The Scotsman and The Business newspapers.

Sir David and Sir Frederick Barclay have agreed to pay Lord Black $466.5m (£250m) for his majority stake in Hollinger Inc, a private company that controls the stake in Hollinger International. That 30 per cent stake includes 73 per cent of the voting shares in the company.

Hollinger International has vowed to fight the Barclays and threatened to adopt a plan to protect minority shareholders. The "shareholder rights plan", revealed at the weekend, would involve issuing millions of new shares to other shareholders.

The viability of the plan will depend on coming legal battles. The issue was thrown into turmoil by Lord Black's bold move on Friday night to change the bylaws of the company so that all company directors - includes himself, his wife, Barbara Amiel, and his cohort Dan Colson - have to be present at any meeting to approve a major transaction. Any such deal would require unanimous board approval under Lord Black's proposal.

Hollinger International said it was "reserving judgement" on the legality and validity of the amended bylaws, but conceded that it would comply with them in the meantime.

Although Lord Black's move jeopardises Hollinger International's plan B ­ an auction of its newspaper assets, which also include The Sunday Telegraph, The Spectator and the Chicago Sun-Times ­ potential counterbidders were undeterred. Candover, the private equity house; Daily Mail and General Trust, the media group; 3i Group, in partnership with the former Trinity Mirror boss David Montgomery; and Collins Stewart, the stockbroker headed by Terry Smith, are all preparing counterbids for Hollinger International's UK titles, according to reports.

Lazard, the US merchant bank handling the auction, has given bidders until the end of next month to make their final offers. Analysts have estimated that the Telegraph Group could fetch more than £500m.

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