Desmond Bids £500m for Britain's Telegraph

12 February 2004

As expected, media baron Richard Desmond has launched a bid for Hollinger International's UK assets. However, he is also taking steps to ensure he gets something from the auction whatever its outcome.

Desmond, owner of Express Newspapers and a stable of so-called 'adult' magazines, has offered over £500 million ($935m; €737m) in cash for the Daily and Sunday Telegraph national newspapers and The Spectator magazine -- the prime assets of Telegraph Group, Hollinger's UK subsidiary.

Hollinger is selling assets to avoid a cash crisis. However, the auction may never be completed, as Britain's reclusive Barclay brothers (with the eager connivance of Lord Conrad Black) are trying to seize control of the media group over the heads of its board. The billionaire twins have agreed a £260m deal to buy Hollinger Inc -- the holding company that owns 30% of Hollinger International's equity but 73% of its voting rights -- from present proprietor Black.

With the outcome of the Barclays' bid yet to be decided, Desmond is trying to ensure he will benefit from any of the deals on the table, even if the game (in which he is but one of several players) comes to nothing.

The Express proprietor has written to Telegraph Group claiming that the Barclay brothers' agreement with Black has triggered certain clauses that allow him to buy full control of a jointly owned printing works.

West Ferry Printers, valued at around £50m, produces both the Telegraph and Express titles, but a change in ownership of the former would allow the latter to buy the 50% stake in the firm it does not already own. Desmond has demanded that Hollinger directors on the printing group's board be suspended and that the sale procedure be initiated immediately.

Such claims are likely to cut little ice with the Barclays, who maintain that under their bid ownership of Telegraph Group will not change -- the publisher will still be part of Hollinger International, which will still be owned by Hollinger Inc. It is only this ultimate parent, they claim, that will change hands.

Meanwhile, Desmond's £500m bid is reportedly backed by the Bank of Scotland and Commerzbank. The deadline for offers is today (Thursday).

Data sourced from: Times Online (UK); additional content by WARC staff