'Poison pill' threat in Telegraph deal

HOLLINGER International's board is expected to meet this week to discuss introducing a 'poison pill' provision to block Lord Black's efforts to sell its Daily and Sunday Telegraph to the Barclay brothers.

A bidding war could also break out over various Hollinger assets, as many observers agree the proposed sale to the Barclays is far from a done deal.

Lazard, the investment bank advising Hollinger International, believes it can raise more than £1bn from breaking up the group - against the £275m offered by the Barclays for Lord Black's 75% voting control in the company.

Rival bids for the group could come from venture capitalists 3i and Candover and from Terry Smith, head of stockbroker Collins Stewart. Daily Mail and General Trust, owner of the Daily Mail, the Mail on Sunday, the Evening Standard and This Is Money, is reviewing the situation. Lazard has given bidders until the end of this week to make their indicative offers.

But even before that, the sale to the Barclays has become more complicated. Lazard may advise Hollinger's board on appropriate poison pills that would effectively make it impossible for Black to do the deal.

While it is as yet unclear what measures may be decided on, one option would be for Hollinger International to dilute Black's controlling stake with a vast issue of new shares.

The board has been spurred into action by Black's move last week to block its own attempt to sell assets by changing the company's rules.

Hollinger Inc, the 73% owner of Hollinger International, which is controlled by Black's Ravelston group, changed the company's rules so any asset sale of more than $1m (£550,000) must now be agreed by every member of Hollinger International's board.

Although Black is no longer chairman or chief executive, he and his wife Barbara Amiel, and close associate Dan Colson, remain directors and could vote against any move to sell assets designed to undermine the Barclay deal.

Black's counter-attack threatens to turn the dispute into a legal quagmire from which the Barclays may simply walk away.

At Black's bidding, Hollinger Inc abolished the review committee set up by Hollinger International to handle potential asset sales.

But Black has been careful not to abolish Hollinger International's special review committee that has been investigating alleged unauthorised payments to the former chairman and various associates.

The Securities and Exchange Commission has said it would veto the Barclay deal if that committee's work was interfered with.