Telegraph and Spectator put up for sale

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The long-awaited sales process for the Telegraph and The Spectator has formally started in what will be a closely watched contest for one of the UK’s top national newspaper groups.

On Friday, the boards of the parent companies behind the Telegraph Media Group Limited and The Spectator said that advisers would launch a sale process for each of the businesses. Goldman Sachs is advising on the sale.

Lloyds Banking Group seized control of the newspaper and magazine from the Barclay family early in the summer following a long-running dispute over unpaid debts of more than £1bn.

The start of the process comes after several months of work by the bank’s advisers on preparing the newspaper and magazine for sale, which will be handled in separate processes. AlixPartners was appointed as receivers. Lazard is also advising Lloyds.

The auction has attracted more than 20 expressions of interest so far, according to people close to the process, with the majority of the offers expected to be for the Spectator.

The Telegraph could fetch more than £500mn, according to analysts, based on realistic multiples of its earnings and revenues. The Spectator could raise more than £70mn. 

Potential bidders have spent the past few months securing financing for a deal that will face intense scrutiny from politicians as well as from the media and competition authorities.

Bids are expected for the Telegraph from investor groups led by hedge fund millionaire Sir Paul Marshall and former Telegraph editor Sir William Lewis, alongside Lord Rothermere’s DMGT, the publisher of The Daily Mail, and National World, the newspaper group led by former Mirror Group chief executive David Montgomery.

German publisher Axel Springer has also expressed an interest, while Rupert Murdoch’s News UK is expected to bid for the Spectator among others.

The Barclay family has sought to derail the formal sales process by offering to pay increasing amounts for the debt behind the group — backed by Abu Dhabi investors — with a latest offer as high as £1bn. However, those familiar with the bank’s thinking say that there are questions about the money, adding that it would be difficult to strike a knockdown deal for the debt.

The formal start of the process will mean that bidders will finally be able to access the group’s detailed financial and operational information, allowing them to value and structure their bids.

Several bidding consortiums have yet to be fully finalised, with questions over to what extent money can be used from investors based in the Middle East.

Government officials are unlikely to want any more than a minority stake in a nationally important newspaper sold to sovereign wealth-backed investors, according to people close to the process.

This month, Lloyds created a new holding company to hold the newspaper assets, while an offshore Barclays family-controlled group that once sat above the business is expected to be dissolved next week.