Telegraph sale hit by 'poison pill'

THE board of Hollinger International today said it had introduced a 'poison pill' to block Conrad Black's sale of its Daily and Sunday Telegraph newspapers to the Barclay brothers.

It is also launching a lawsuit against Lord Black, in Delaware, to stymie his bid to undermine the board's own efforts to sell Hollinger International's assets.

The legal challenge in Delaware, where Hollinger International is registered, also seeks a preliminary injunction to stop him finalising a deal with the Barclays.

The poison pill will allow Hollinger shareholders with non-voting B shares to convert them to fully voting A shares if more than 20% of the company is bought by an outsider.

This would make the deal far less attractive to the Barclays. Under their current purchase agreement with Lord Black, they would end up with 73% voting control of Hollinger International, which owns the Telegraph and other newspapers.

Under the poison pill terms, however, they would end up with no more than 30%. At the same time, Hollinger's board is making a legal challenge to Lord Black's move last Friday to disband the special review committee set up to handle the board's attempts to sell all or some of the company's assets.

Lazard Brothers, the investment bank, has sent out sales documents to several potential bidders on behalf of the company and bids are expected this week. The bank believes it could raise more than $1bn (£548m) from the sale, against Lord Black's $275m deal with the Barclays.