Kwik Fit joins Mail bid for Telegraph

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The Independent Online

The company that owns both Kwik Fit, the car repair firm, and department store Debenhams has joined forces with the Daily Mail to make a dramatic new bid to buy the Telegraph newspaper group.

The company that owns both Kwik Fit, the car repair firm, and department store Debenhams has joined forces with the Daily Mail to make a dramatic new bid to buy the Telegraph newspaper group.

Bidding for the Telegraph group - which includes The Daily Telegraph, The Sunday Telegraph and The Spectator - enters its final phase this week after six months of sale negotiations, which began when its former owner Lord Black was accused of embezzlement.

Daily Mail & General Trust's hopes of buying the group have been boosted by its deal with the venture capitalist firm CVC Capital Partners. It is understood that CVC would take a majority stake, but DMGT would have the option of buying out its partner later.

The joint bid is thought to be worth almost £700m and will put pressure on the remaining two bidders - the Barclay brothers, owners of The Scotsman, and the private equity group 3i.

This week will see a flurry of activity as Lazard, the investment bank handling the auction on behalf of the Telegraph's parent company Hollinger International, tries to extract the highest price.

The Lazard team is led by legendary investment banker Bruce Wasserstein, nicknamed "Bid 'em up Bruce" for his skill in driving up prices of companies. Lazard is expected to select a winning bid within a fortnight.

But doubts remain over how a joint bid between CVC and DMGT would work. Shareholders in DMGT will be concerned the company could be prepared to overpay for the group. Lord Rothermere, the chairman, believes the sale of the Telegraph is a once-in-a- lifetime opportunity but other shareholders would want to be convinced of its value.

There are also regulatory issues. It was reported last night that a "senior Labour strategist" was suggesting the government would be "very much against" the bid.

The Competition Commission could decide to block the bid on the grounds that a group combining the Telegraph and the Mail, commanding a 35 per cent share of upmarket ABC1 readers, would have too large a market share. Advertisers have also expressed concern a combined group could use its dominance to increase advertising rates. Patricia Hewitt, Secretary of State for Trade and Industry, also has new powers to block deals between media companies on "public interest" grounds. With an election a year away, Labour could press her to prevent two pro-Tory newspaper groups joining forces.

MPs last night warned the bid would also be subjected to an investigation by the Commons culture committee.

Chris Bryant, a Blairite MP and member of the committee, said: "I am 95 per cent certain the Trade Secretary will conclude that there are public interest issues involved and refer it to Ofcom."

DMGT's bid with CVC is unconditional, which means if it is blocked on regulatory grounds, it would not be able to hand the titles back to Hollinger and would have to sell them to a new buyer. CVC is flush after quadrupling its £137m investment in the car parts and bicycle group Halfords when it was floated last week. As well as Kwik Fit and Debenhams, CVC owns a stake in the pub chain Spirit Group and used to own the bookmakers William Hill.

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