Barclays triumph in Telegraph bid

The Telegraph has been sold at the second attempt

The Barclay brothers have ended months of uncertainty by buying the Daily and Sunday Telegraphs and the Spectator magazine for £665m.

Telegraph group chief executive Jeremy Deedes welcomed the move, saying it would bring the newspapers and staff a "period of certainty and stability".

The brothers had been battling venture capital group 3i to snap up the group.

Hollinger International put the group up for sale in November after a bitter row with the then boss Lord Black.

Lord Black was accused last year of taking unauthorised payments from the firm.

He had attempted to sell a controlling stake in the company that owns the Telegraph directly to the Barclay brothers for £245m, but was stopped by a court case.

The Barclays, multi-millionaire twin brothers who live in the Channel Islands, are the owners of the Scotsman newspaper and London's Ritz hotel.

'In good hands'

"We are delighted to be the new owners and look forward to working with the team to take the business forward," Aidan Barclay, chairman of the Barclays' holding group and son of Sir David, one of the twins, told the BBC.

BARCLAYS IN BUSINESS Media - Telegraph group (Daily and Sunday Telegraph, Spectator), The Scotsman, The Business, printer JCM Media Property - hotels including the Ritz, and Howard Hotel in London and Monte Carlo's Mirabeau, casinos Retail - Littlewoods Shipping Profile: The Barclay brothers Q&A: Battle for the Telegraph

"We are looking forward to working with the management in running the business, " he later said.

Meanwhile, Mr Deedes said he did not expect the Barclay brothers to break up and sell off the group, saying the pair had a "great track record for nurturing, developing and investing in their acquisitions".

"They may well want to have changes, but if you look at their other acquisitions, they have bought them for life. If you pay the sort of money that is being paid for these titles it hardly suggests you will buy them and start tearing them apart," he told the BBC.

"One can only look at other acquisitions. I have to say they come out with 10 out of 10 as employers."

Challenges ahead

But the takeover will not be plain sailing for the brothers.

The new owners will face significant challenges, including flagging circulation and the question of joint ownership of its printing facilities with another disappointed suitor, Daily Express owner Richard Desmond.

UK NATIONAL NEWSPAPER MARKET SHARE* 1 - Associated Newspapers - Mail (4.3m) 2 - Express Newspapers (2.6m) 3 - Financial Times (102,795) 4 - Guardian newspapers (676,027) 5 - Independent Newspapers (331,946) 6 - News International - Times/Sun (8m) 7 - Scotsman Publications (136,431) 8 - Scottish Daily Record & Sunday Mail (1.04m) 9 - Sport Newspapers (153,418) 10 - Telegraph Group (823,626) 11 - Trinity Mirror (4.2m) *Source: ABC average total circulation, 3-30 May 2004

And the story of the sale is not necessarily over - there may come another twist in the form of legal action from Lord Black to block the purchase.

According to a report in the Daily Telegraph, he may use his majority voting stake in Hollinger to prevent the sale.

The group believes it does not need the permission of a majority shareholder to push the deal through - but this could be contested in US courts.

The sale itself did not come off as originally intended by the group's owner.

Originally, Hollinger International had hoped to sell the whole of its newspaper portfolio, which includes the Chicago Sun-Times and the Jerusalem Post.

The bid process, run by investment bank Lazard, rapidly revealed that buyers were focusing on the Daily and Sunday Telegraph and the Spectator magazine.

The Barclay brothers and the 3i venture capital group were the only two bidders left after rivals - including the firm behind the UK's Daily Mail and the Axel Springer German media group - pulled out as the likely price rose.

TELEGRAPH FACTS UK's best-selling broadsheet Circulation of 873,181 Editor - Martin Newland Up for sale from US-based Hollinger International Bought by former Hollinger boss Lord Black in 1985

The papers were put up for sale as a result of the bitter fight between Lord Black, who still controls 70% of Hollinger International voting rights despite holding only 30% of the shares, and the group's board.

An audit had revealed millions of dollars in "non-competition payments" allegedly paid to Lord Black and fellow directors without authorisation.

Hollinger International is now suing the peer for $1.25bn, accusing him of "racketeering" by using the company's money to support his lifestyle.