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Media group Axel Springer has agreed to buy the Telegraph for £575mn in a move that will scupper the proposed acquisition of the UK newspaper group by the Daily Mail, said people briefed about the matter.
The deal will result in one of the UK’s oldest newspapers, which has strong links with the British establishment and Conservative Party, ending up in German ownership.
Britain’s Daily Mail had been close to securing a deal to take control of the Telegraph, a close rival, in what would have furthered the ambitions of its owner Lord Rothermere to create one of Fleet Street’s biggest media groups.
The FT first reported last month Axel Springer’s eleventh-hour interest in the Telegraph as part of a consortium led by Dovid Efune, the owner of the New York Sun.
However, in recent days the German publisher started negotiating a deal on its own with RedBird IMI, the US-Emirati group that controlled the conservative newspaper group, excluding Efune.
The prospect that “the Torygraph” — as it has been dubbed — could soon be in the hands of German owners for the first time in its 168-year history will send shockwaves through the ranks of conservative power brokers in Westminster.
A tortuous sales process has meant that the Telegraph has not had a permanent owner for about three years, but various groups ranging from the oil-rich emirate of Abu Dhabi to members of New York’s financial elite have all attempted to acquire it at different points.
The sale of the newspaper was kicked off three years ago when Lloyds Banking Group seized control following unpaid debts from the Barclay family, which had owned the Telegraph since 2004.
A deal struck to buy the media group by RedBird IMI, the UAE-backed investment group, was then blocked by the former Conservative government owing to concerns over passing control of an influential newspaper to a foreign state-backed fund.
It was never allowed to convert the debt it acquired from Lloyds into equity, which is why it now needs to sell this on to DMGT.
Last month, UK ministers dropped the legal restrictions on an onward sale of the option, leaving DMGT able to take ownership. DMGT’s offer is funded by a loan from NatWest.
The deal will be a relief for RedBird IMI, which has sought to extricate itself from the newspaper for months while also proving doubters wrong about the £500mn price tag that it has demanded.
However, the deal still faces scrutiny from media watchdog Ofcom and the Competition and Markets Authority.
The decision to switch buyer was made after Springer, which owns Politico and Business Insider as well as Bild and Die Welt in Germany, came forward with a stronger bid.