Lloyds pushes on with Telegraph auction despite new Barclay offer

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Lloyds Banking Group is set to push ahead with the auction of the Telegraph newspaper and Spectator magazine as early as this week, despite a fresh attempt to derail the process by the Barclay family with an increased offer of £1bn.

The Barclays have made repeated attempts through the summer to regain control of the Telegraph Media Group, which was seized by Lloyds after the family failed to repay debts of more than £1.2bn that had built up behind the business over decades.

The latest bid to be lodged is worth about £1bn, according to two people familiar with the matter. This is more than what the Telegraph is likely to be valued at auction, according to analysts.

However, the bank so far remains committed to selling the newspaper through a formal process run by Goldman Sachs, according to people close to the situation.

They caution that there are still questions over the source of funding for the Barclay family, which has held talks with Abu Dhabi sovereign wealth investors to support their offer.

Government officials have privately raised warnings over passing ownership of the nationally important newspaper to investors based in the Middle East, according to people close to the bidding process, with some suggesting that only a minority stake would be deemed acceptable.

Any offer from the Barclay family is also likely to be used to pay down the debts behind the group, which have already been significantly written down on Lloyds’ books, rather than as participation in the auction. 

People close to the process question why the Barclay family does not use the money to compete with rivals in the auction rather than strike a pre-emptive deal. 

However the new, higher offer will still test the commitment of the bank to carry on with the auction process, one added, if Lloyds has greater certainty over the details of the bid.

The proposal was made directly by the family to Lloyds, according to one person, rather than submitted through Goldman Sachs, which was appointed to oversee the sale. The offer of £1bn from the family was first reported by Sky News.

Potential bidders have been frustrated by the slow pace at which the Telegraph has been brought to the market, with several saying that a deal would need to be concluded before a UK election expected next year. 

Any successful offer would need to pass scrutiny from the competition and media watchdogs, as well as ministers in Downing Street, which would add further delays.

A number of media groups have registered their interest for either the Telegraph, the Spectator, or both, including UK rival DMGT, German publisher Axel Springer, Rupert Murdoch’s News UK, and National World, the newspaper group led by David Montgomery. Sir Paul Marshall and Sir William Lewis have also been preparing bids.

A spokesperson for the Barclay family said: “The family continues to work on finding a mutually acceptable resolution with Lloyds Banking Group regarding the media assets.”

Lloyds declined to comment.