Former advertising mogul Lord Saatchi has accused the potential new owners of The Daily Telegraph of overpaying for the title, after his offer of £350 million was rejected. Sources have revealed that Lord Saatchi and Lady Lynn Forester de Rothschild, a former director of The Economist Group, did not make it to the second round of the auction for the right-leaning newspaper, according to bankers Raine Group and Robey Warshaw who are handling the sale on behalf of RedBird IMI.
RedBird IMI, a state-backed vehicle from Abu Dhabi, is attempting to take ownership of The Telegraph and its sister publication, The Spectator. However, their bid has been hindered by the UK government’s decision to change media laws, preventing foreign states from exerting influence over national newspapers. Last week, it was reported that hedge fund tycoon Sir Paul Marshall was the front-runner to acquire The Spectator.
Lord Saatchi and Lady de Rothschild, who have been advised by Lazard, had structured their offer to include contingent payments based on the future performance of the business. In a statement to Sky News, they said, “We are sorry RedBird IMI overpaid with £600m for The Telegraph. We are offering £350m plus further payments dependent on performance. Our bid is not the biggest – but it is the best. Whatever happens, this important national asset should end up in safe hands for the long term.”
However, RedBird IMI responded with a statement saying, “They never signed an NDA [non-disclosure agreement]. They never made a serious bid. And they haven’t been invited into the second round. So, with all due respect, no one takes Maurice or his views on any of this seriously.”
The elimination of Lord Saatchi’s bid in the first round of bidding leaves a number of other potential buyers in contention for The Telegraph. National World, headed by industry veteran David Montgomery, has expressed interest, and former chancellor Nadhim Zahawi is reportedly lining up backers for a bid. RedBird, the US-based investor that holds the option to buy The Telegraph, may also play a role as a future investor.
Negotiations for Sir Paul to acquire The Spectator have raised doubts about his potential to also purchase the newspaper titles. Daily Mail proprietor Lord Rothermere withdrew from the bidding earlier this summer due to competition concerns. The fate of The Telegraph, known for its staunch support of the Conservative Party, has been uncertain for over a year since Lloyds Banking Group seized control of its parent companies after the Barclay family fell behind on debt repayments.
The Barclays continue to control online retailer Very Group, with financing from IMI. The Lloyds debt, totaling over £1.15bn, was repaid by RedBird IMI on behalf of the family. RedBird IMI is majority-owned by IMI, which is controlled by UAE’s deputy prime minister and owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan.
The offer of £350m for the group raises questions about whether RedBird IMI will be able to recoup the £600m it paid for the call option. However, sources close to the process have stated that there is still “robust” interest in The Telegraph at significantly higher prices than Lord Saatchi and Lady de Rothschild’s offer.
