The sale of the Telegraph looks set to finally go through after government legislation to allow foreign states to own up to 15% in British newspapers survived a potentially fatal vote in the House of Lords.
Gerry Cardinale’s RedBird Capital is leading a consortium looking to buy the Telegraph for £500m, in a deal that would result in the United Arab Emirates retaining a stake of 15%.
Ministers have been attempting to push through legislation to allow foreign states to own passive stakes of up to 15% in British newspapers, after the previous Conservative administration proposed a law in March last year that set the limit at zero.
That cap meant the joint venture RedBird IMI, which bought the Telegraph Media Group in November 2023, would have to sell up as it is 75% funded by International Media Investments (IMI) – controlled by Sheikh Mansour bin Zayed Al Nahyan, the vice-president of the United Arab Emirates.
The US private equity company RedBird Capital, which contributed the other 25% of funding, has tabled a deal to buy the Telegraph under which IMI would retain a minority stake of up to 15%, although RedBird has said it can fully fund a deal in its own right.
The government’s foreign ownership bill would allow this purchase to go ahead but the plan was put at risk on Tuesday after Liberal Democrat peers attempted to block it via a rare “fatal motion”, the strongest opposition that can be taken in the House of Lords, which would force ministers to reintroduce the legislation.
After an almost three-hour debate, peers voted to reject the fatal motion 267 to 155, meaning the 15% cap will pass into law.
However, another statutory instrument will need to be introduced after the parliamentary recess in September to add a rule that will stop foreign investors from buying multiple 15% stakes in British newspapers.
No final deal for the Telegraph has yet been signed, and a takeover will still face regulatory hurdles, including a public interest test that will be triggered by the culture secretary, Lisa Nandy.
It will also be subject to a full investigation by the Competition and Markets Authority.
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However, the government’s win in the House of Lords is likely to prompt RedBird Capital to publicly announce its formal bid in the coming weeks.
RedBird Capital – which holds various investments including a stake in the parent company of Liverpool football club and is seeking to jointly acquire the TV and film business Paramount – has said that if the deal goes ahead it would become the sole controlling investor of the Telegraph. It is also set to bring on British partners with small stakes, including the owner of the Daily Mail and Len Blavatnik, the owner of Warner Music and the sports and entertainment streaming service Dazn.