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More than a dozen Conservative MPs have urged the deputy prime minister to use the UK’s national security powers to scrutinise the proposed takeover of the Telegraph by Abu Dhabi-backed RedBird IMI ahead of an expected regulatory intervention on Thursday.
The group of MPs said on Wednesday that the deal presented a “very real potential national security threat”, raising pressure on ministers to intervene in the bid for the national broadsheet that has strong ties to the British establishment.
Lucy Frazer, culture secretary, is set to ask regulators this week to scrutinise the deal, using separate powers under the Enterprise Act, according to those close to the situation.
Frazer was likely to use a Public Interest Intervention Notice (PIIN) to spark an investigation by Ofcom, the media regulator, and potentially by the Competition and Markets Authority, they added.
This is expected to focus on halting the transfer of ownership to RedBird IMI until regulators have had the chance to fully examine the deal’s implications.
RedBird IMI and the Lloyds Banking Group — which took control of the newspaper group this summer — have proposed an independent board to oversee the newspaper during the investigation, keeping the group separate. RedBird IMI has said it would not take ownership of the media group without permission from ministers. There would also need to be “mechanisms” to unwind any blocked deal, said one person close to the deal.
Redbird IMI is in pole position to take over the Telegraph and the Spectator magazine after agreeing to pay down the money owed to Lloyds by the Barclay family, the former owners. The debts would subsequently convert into ownership of the titles.
Lawyers for Lloyds, the Barclay family and RedBird IMI were on Wednesday finalising the transaction, two people close to the deal said, with money lined up to repay the £1.1bn in debt. This could happen on Friday, but was more likely to be paid on Monday, they added. A court hearing is also scheduled for Monday to dissolve the holding company that sits above the debt.
Meanwhile, Tory MPs want to have a wider probe by pressuring Oliver Dowden, the deputy prime minister, to use newer intervention powers under the National Security and Investment Act, which can block proposed acquisitions.
The group of MPs includes the former Tory leader Sir Iain Duncan Smith, Alicia Kearns, chair of the foreign affairs select committee, Robert Courts, chair of the Commons defence committee, and former minister Neil O’Brien.
The letter to Dowden said “information warfare is more relevant than ever — and with the UAE’s increasingly influential position as a mediator and power broker, the risk for interference in Britain’s national conversation seems self-evident”.
The Conservative party is facing a tricky balancing act between ensuring the independence of a newspaper with close links to the party, while also making certain it does not damage relations with a state that is already investing heavily in the UK.
To complicate matters, the prime minister this week hosted a global investment summit near London to promote Britain’s openness to foreign capital. Rishi Sunak travels to the UAE this week for the COP28 climate summit and may want to avoid offending his hosts.
RedBird IMI, run by former CNN boss Jeff Zucker, is a joint venture between the US private equity firm RedBird Capital but with the majority of its cash from Abu Dhabi’s International Media Investments, controlled by Sheikh Mansour bin Zayed al-Nahyan.
“There will be a PIIN, it is just a matter of how widely drawn it is,” said one person close to the deal.
Zucker flew to London this week to offer personal assurances that Abu Dhabi would have no influence on the newspaper’s management.
Rival bidders, some of whom have also attacked the proposed deal, have started to prepare for the resumption of the auction to sell the newspaper should the deal fall through, according to those close to the efforts.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
