Springer ducks chance to go global

Axel Springer's decision to bow out of the bidding for the Telegraph places a large question mark over whether the German publishing giant will ever make the grade as an international media player - or even as a major newspaper publisher in this country.

It is, after all, its second substantial setback in Britain in less than a decade.

When the Mirror Group was up for sale in the 1990s, Springer expressed serious interest. A bid was in preparation.

But when news leaked out and Rupert Murdoch threatened "war" should the well-financed Germans take control of his Sun's main rival, Frieda Springer, widow of the group's founder and company matriarch, ordered an immediate retreat. Springer left the field without even putting up a fight.

There seems to have been a similar collective loss of bottle over the Telegraph. Despite having arranged up to £675 million in credit lines from Deutsche Bank and been advised that, if it was to stay in the auction, it would have to offer at least £600 million, Springer ended up bidding even less than the £ 550 million reported by The Sunday Times.

That was a bid that was bound to fail. Springer made much of the fact that it was an "all cash" bid; but everybody trying to buy the Telegraph is offering cash.

It also thought it could steal a march by making its offer "binding" - ie it would not try to reduce it when the haggling started in the final stages of due diligence, which often happens in takeover situations.

But less than £550 million was just too low to make the binding element in the Springer bid attractive. The Telegraph's investment bank advisers, Lazard, immediately informed the Germans that they were out of the bidding unless their offer was revised substantially upwards.

Senior Springer executives were undoubtedly enthusiastic at the prospect of winning the Telegraph and might have been prepared to up their bid.

But I understand their hands were tied by the company's supervisory board, populated by the great and the good of German business, including trade union figures. They were much more cautious and regarded any higher bid as overpaying. Once again Germany's bureaucratic business structure had proved inadequate for a competitive, highrolling bid process.

So the Germans departed from the field without much of a fight, raising questions of how serious they really were about buying the Telegraph. My sense is that they were indeed serious - but out of their depth. They did not really understand what it would take to win the Telegraph trophy.

Of course, Springer remains a formidable and prestigious German media player. It has also made some successful forays into Eastern Europe. But the Telegraph was its ticket to becoming a truly international publishing giant.