City stockbroking firm makes Telegraph bid

A surprise new bidder yesterday entered the battle for control of the Telegraph publishing group, which owns The Daily and Sunday Telegraph newspapers and the Spectator weekly magazine.

Collins Stewart, a City stockbroking firm, has put together a consortium of pension and other investment funds to make a provisional bid of up to £500m to New York-based Hollinger International, the Telegraph group's parent company, which is in cash difficulties.

A spokesman for Collins Stewart said: "We have put in an offer, and we're waiting to hear from Hollinger." He did not confirm how much the consortium was willing to pay, but added that it had assembled a management team to take the reins at the newspapers.

Their plan is to float the Telegraph group on the London stock exchange as soon as possible after completing the deal, enabling the public to buy shares in the business.

As the Collins Stewart consortium has no existing media interests, the bid would not be examined by the Competition Commission. An investigation is expected to take place automatically in the event of an offer from another newspaper group, but Collins Stewart could offer Hollinger greater speed and certainty than potentially higher bids from media companies.

Daily Mail and General Trust, owner of the Daily Mail and The Mail on Sunday, has said it is interested in buying the Telegraph. So has Richard Desmond, who owns the Express newspaper group. Two foreign publishing companies, the US-based Gannett and Germany's Axel Springer, have also said they would make a bid. Hollinger, which also owns The Chicago Sun-Times and The Jerusalem Post, became caught up in a financial scandal after it was revealed the former chief executive Lord Black of Crossharbour and other directors were given "non-compete" payments totalling $32.5m (£18.5m).

Hollinger then hired the investment bank Lazards to explore a possible sale of its assets. Lazards will send full details of the Telegraph business to all credible bidders in the new year, in an effort to stimulate an auction.

A Collins Stewart spokesman said: "This is a real bid. We believe we can outbid other bidders because the stock market is content with smaller returns on investments. But if a vanity publisher comes along and offers an unrealistic amount, there isn't much we can do about that. Although we will put a management team into the Telegraph, we do not intend to make wholesale changes."

However, a media analyst said: "If it is worth £500m to Collins Stewart, it could be worth more than that to another City bidder." Collins Stewart has already organised consortium bids for other companies, including the Centre Parcs holiday camp business and Northumbrian Water.

As with any other buyer of the Telegraph titles, apart from Mr Desmond, Collins Stewart would have to deal with the fact that the group owns West Ferry Printers in Docklands, London, jointly with Mr Desmond. The Telegraph group has a contract to print its newspapers on the West Ferry presses, but Mr Desmond has said that he believes owning the other 50 per cent puts him in a strong bargaining position.