It has now been confirmed that RedBird Capital has pulled its bid to buy the Telegraph Media Group. This announcement follows heightened concerns over its funding sources and new regulatory changes. The company fielded heated queries over the high dollar amount it allegedly received from Chinese and Gulf-states based investors. That heightened scrutiny combined to compel them to withdraw their proposals.
The withdrawal comes on heels of new legislation. In addition, this law prohibits foreign sovereign wealth funds from acquiring more than 15% of any newspaper or periodical. RedBird’s biggest challenge going in was this law. The owner’s goal was to expand the Telegraph’s reach and swell its subscriber base in the United States. Cardinale, founder of private equity firm RedBird, had first pegged that market hole as the best target for the Telegraph’s growth into the US.
As it turned out, RedBird’s bid was further complicated by recent damaging articles coming out of that new Telegraph newsroom. These reports raised significant alarm regarding the continued viability of the acquisition itself. So RedBird decided to withdraw from negotiations.
“RedBird has today withdrawn its bid for the Telegraph Media Group. We remain fully confident that the Telegraph and its world-class team have a bright future ahead of them and we will work hard to help secure a solution which is in the best interests of employees and readers.” – RedBird Capital spokesman
Despite the failures, Cardinale wanted to use the Telegraph’s reputation for strong editorial integrity. His plan was to increase its share in the cutthroat US market. He imagined turning the Telegraph into a national powerhouse. To do this, he put a particular emphasis on growing its subscriber base and reaching a more diverse audience.