RedBird Capital pulls out of deal to buy newspaper

US investment group RedBird Capital has pulled out of a deal to buy the Daily and Sunday Telegraph for £500 million.

RedBird’s previous attempt to buy Telegraph was rejected by politicians as it was majority-funded by the IMI group in Abu Dhabi; This group also belonged to the Abu Dhabi royal family.

The change in law meant that foreign government funds could take a maximum stake of 15% in newspapers or periodicals.

The new offer complied with this rule but it is understood the government plans to submit the deal for regulatory review.

A spokesman for the group said: “RedBird has today withdrawn its bid for the Telegraph Media Group.

“We have every confidence that the Telegraph and its world-class team have a bright future ahead of them and we will work hard to help deliver a solution that is in the best interests of staff and readers.”

Sources close to Redbird insisted they were confident the proposal would pass the government’s review process, but cited negative articles about the proposal in the current Telegraph newsroom as a factor shelving their interest.

RedBird itself has faced questions over the extent of investment it has received from Chinese and Gulf-based investors.

A spokesman for IMI Group said its “priority is to end uncertainty and ensure the long-term success of the Telegraph” and that it remained in contact with “relevant parties” about the deal.

It said it remains committed to completing the sale while cooperating with the government and regulators.

RedBird founder Gerry Cardinale had planned to expand Telegraph’s reach and subscriber base in the US because he believed there was a gap in the market.

Among its other investments, RedBird Capital also owns the Italian football team AC Milan.

The Daily Telegraph has been in limbo for more than two years, with the Redbird IMI consortium paying off the debts of the Telegraph’s previous owners, the Barclay family, hoping to eventually take ownership of the newspapers.