Proactive Investors - UK Culture Secretary Lucy Frazer is expected to intervene in a bid to take over the Telegraph Media Group from an investment group backed by Abu Dhabi’s royal family, Sky News reported.
The culture secretary is reportedly considering issuing a public interest intervention notice that would trigger an investigation into RedBird IMI’s proposed acquisition of the newspaper group, which is estimated to be worth about £1.15 billion.
RedBird IMI (LON:IMI) is partially funded by Sheikh Mansour bin Zayed al Nahyan, a member of Abu Dhabi’s royal family and owner of Manchester City.
The investment group was set up as a joint venture between RedBird Capital, a US-based private-equity firm, and International Media Investments, which is backed by the Emirati royal.
It is headed by former CNN president Jeff Zucker, who has hired Ed Richards, the former boss of media regulator Ofcom, as a lobbyist.
The culture secretary’s probe would examine the implications of a Gulf state taking control of significant British media assets.
IMI has reportedly bid £1.15 billion to buy newspapers the Telegraph and the Spectator as part of an auction of the group’s assets, which has reportedly been paused until early next month.
The auction of the Telegraph Media Group's assets has drawn interest from additonal bidders such as Lord Rothermere, National World, and hedge fund billionaire Paule Wace, the co-head of hedge fund Marshall Wace.
The Telegraph newspaper itself reported that Wace’s advisers had suggested there were grounds for the culture secretary to intervene in RedBird IMI’s bid for the media group.
The probe concerns IMI’s provision of loans to the Barclay family that would help them repay debts owed to Lloyds Banking Group PLC (LON:LLOY) as part of a prospective deal.
Lloyds took the Telegraph Media Group into receivership in June after the Barclay family were unable to pay debts associated with the group that exceed £1 billion.
The Barclays (LON:BARC) family have reportedly agreed not to contest the liquidation of one of their holding companies if they do not repay the loans by 1 December.
Regulators Ofcom and the Competition Markets Authority could be involved in the probe, which would likely last for several months, further delaying the rescue of the media company.
RedBird IMI said it is committed to maintaining the existing editorial team and editorial independence of the Telegraph and the Spectator publications.