Barclay brothers buy Telegraph

THE billionaire Barclay twins last night won the battle for control of the Daily Telegraph. Sir Frederick and Sir David Barclay will pay £665m for the Daily and Sunday titles and the Spectator magazine.

The 69-year- old brothers, who own The Ritz and the Littlewoods mail order catalogues and live in a £27m castle on their own Channel island, Brecqhou, outbid venture capital firms 3i and Veronis Suhler Stevenson, who offered £650m.

Other bidders had dropped out as the price soared.

Their takeover, at the end of a five-month auction, may face a legal challenge from Lord Black, the ousted chairman of the Telegraph's US parent company Hollinger International.

Telegraph group chief executive Jeremy Deedes said: 'This is the first day of a new life for the staff of the Telegraph Group, who have endured months of uncertainty with great resolve.'

Aidan Barclay, son of Sir David and chairman of the brothers' Press Acquisitions company, said: 'We are delighted to have reached agreement for the purchase of the Telegraph Group, which comprises some of the great titles in newspaper publishing, and to end the uncertainty surrounding their future.

'We are looking forward to working with the management in running the business.' The 149-year-old newspaper's future has been uncertain for seven months.

Lord Black, a self-made Canadian businessman, was unseated as chairman by his fellow directors in January. That was almost a year after shareholders began to question the fat management fees and perks he was receiving.

The Telegraph's sales have slumped below one million in the last two years and profits have been squeezed.

The Barclays' first attempt to buy the Telegraph through a £256m purchase of Black's controlling stake in Hollinger was blocked by US judge Leo Strine in February.

The deal seemed a cheap way to take control of Lord Black's publishing empire but was condemned by the judge.

Lord Black will have to take his campaign to block the sale back to Strine, the man who called him 'cunning and calculated' in an earlier ruling.

The Barclays began amassing their £2bn fortune with a string of estate agencies in the 1970s. They later expanded into property and shipping.

They have been involved in newspapers for more than a decade with mixed results. The Scotsman, acquired in 1995, is battling against ailing circulation but made a £4m pre-tax profit in the last year accounts were filed.

The Business, formerly Sunday Business, has cost them £50m in five years and The European was shut down after heavy losses.

Attempts to take control of the Glasgow Herald titles failed after stirring up a political storm north of the border.

It is still not clear what management changes the Barclays plan but Telegraph staff will be relieved that venture capitalists did not win the auction.

David Montgomery, the former Mirror Group boss who spearheaded the 3i bid, was sharpening his knife for a round of cuts. 3i has now lost out in three major newspaper auctions after failing to win the Telegraph, Daily Express and Herald.

The Daily Mail's owner, Daily Mail and General Trust, which also owns This Is Money, dropped out of the auction last week.

The Barclays' headline purchase price is £729.5m, but this includes £64.5million of cash on the Telegraph's balance sheet. The deal is due to close on 30 July.

Lord Black, who was elevated to the peerage in 2001, bought the newspapers from the Berry family in 1985 but the Daily Telegraph's future has been in doubt for the last three years when he started to dismantle his global newspaper empire to pay off debts.

He faces a £660m lawsuit over allegations of racketeering. US and Canadian financial watchdogs are jointly probing his dealings.