Barclay brothers clinch 'Telegraph' in £665m deal

The Barclay brothers triumphed last night in the hard-fought contest to buy The Daily Telegraph and its sister publications.

The Barclay brothers triumphed last night in the hard-fought contest to buy The Daily Telegraph and its sister publications.

A board meeting of the Telegraph's owners, Hollinger International, was called to consider final offers from Sir David and Sir Frederick Barclay and the other bidder still in the contest, the finance group 3i, which was advised by David Montgomery, a former chief executive of the Mirror Group.

The Barclays' winning offer of £665m represented a trophy asset price for the papers. It is understood that 3i had offered £650m. On purely financial considerations, newspaper executives have said that a price of no more than £550m was justified. The headline price of the Barclays' deal was £729.5m, but counting the cash already on the Telegraph's books and debt, the sum they agreed, in effect, to pay was £650m.

The twins have acquired The Daily Telegraph, the highest circulation broadsheet newspaper, along with The Sunday Telegraph, which together account for 8 per cent of the national newspaper market, and The Spectator weekly magazine.

The political orientation and worldview of the "Torygraph" appears safe in the hands of Sir David and Sir Frederick. They are Conservative Party donors and supporters and are also broadly pro-American. In this their views are similar to those of Lord Black of Crossharbour, the disgraced former chairman of Holllinger. Only perhaps on the issue of the Middle East may there be some obvious change of tone. The Telegraph was stridently pro-Israel under Lord Black's ownership - a view driven by his wife, Barbara Amiel - while the Barclays do not have well-known views on the subject.

Earlier in the auction process of the newspapers, which has been running since November, the Barclays beat off fierce competition from others keen to acquire the titles in what was a rare opportunity to buy a national newspaper. The owners of The Daily Mail fought hard to buy the papers but last week admitted that they could not afford the very rich price that bidding had reached. Axel Springer, the German newspaper company, had to drop out at an earlier stage for the same reason.

The Barclays were able to outgun rivals because they run a private business empire that has no outside shareholders to answer to. The secretive twins already own The Scotsman and its sister paper, Scotland on Sunday, as well as The Business, a weekly national title. They have delegated management of these to Andrew Neil, a former Sunday Times editor. Mr Neil's record has attracted much criticism, with rivals pointing to seemingly constant changes of strategy - and editors at The Scotsman. There has also been cost-cutting, especially at The Business.

With the Telegraph, the Barclays have promised that Mr Neil will only be involved as a "consultant". Management of the papers is likely to fall to Aidan Barclay, son of Sir David and chairman of the Barclays company buying the titles.

Much attention will focus on who will edit The Daily Telegraph. The position of Martin Newland, appointed just before scandal erupted around Lord Black last year, has been seen as precarious. Speculation over a likely alternative editor has focused on Dominic Lawson, editor of The Sunday Telegraph, and Jeff Randall, the business editor of the BBC, who used to work for the twins as editor of The Business.

Journalists of the Telegraph titles are likely to be relieved that 3i did not win the auction. It was feared that, as purely financial buyers, they would look to cut costs much more than an owner who was motivated by the prestige of having a national newspaper.

The defeat of the Daily Mail group will also be of great satisfaction to its rivals, especially Rupert Murdoch's News International.

THE BATTLE FOR CONTROL

17 November 2003: Hollinger International says it is considering selling the company and that Lord Black of Crossharbour is stepping down as its chief executive. Move follows an internal inquiry into executive payments.

15 December: City stockbrokers Collins Stewart offers £500m.

18 January 2004: Media and property owners Sir David and Sir Frederick Barclay agree£260m takeover of Telegraph titles' owner, Hollinger Inc, with Lord Black.

26 January: Hollinger International fights back by approving "poison pill" that seeks to cut the voting power of Hollinger Inc from 73 per cent to 30 per cent.

11 February: Express Newspapers owner Richard Desmond makes a bid for Telegraph titles.

18 February: A US court hearing begins as Hollinger International seek to block deal between Lord Black and Barclay brothers.

27 February: US court rules that deal between Barclay brothers and Lord Black is invalid.

2 March: Barclay brothers withdraw offer to buy Lord Black's stake in Hollinger Inc. They later enter formal bidding process.

26 March: Mr Desmond ends interest in the auction.

17 June: Newspaper group Daily Mail & General Trustquits over price.

22 June: Hollinger International announces Press Acquisitions Limited has agreed to acquire Telegraph Group Limited for £729.5m in cash.