Mark Kleinman: Hold the Telegraph front page – then hold it some more

Mark Kleinman is Sky News’ City Editor and is the man who gets the Square Mile talking in his weekly City AM column. This week he tackles the Telegraph bid, Mike Ashley’s failed Boohoo approach and an oil deal in the North Sea

I suspect you’d have got long odds on January 1 on the auction of The Daily Telegraph remaining wholly unresolved at the end of this calendar year. In that sense, the sale of one of Britain’s most influential right-wing newspaper groups ranks high on my list of the most surprising M&A (non) outcomes of 2024.

Not only is the destiny of the title and its Sunday sister newspaper still unclear, but there looks to be a growing likelihood that – in the best traditions of a Fleet Street editor tearing up their front page minutes before it is due to go to press – the sale process will shift yet again in an entirely different direction.

Much of the explanation for that lies in the fact that IMI, the Abu Dhabi-based vehicle which is owed much of the £500m of outstanding debt used to repay the Barclay family’s debt to Lloyds Banking Group more than a year ago, has been determined to turn a profit. That has led both RedBird IMI and its advisers at Raine Group and Robey Warshaw into a corporate finance cul-de-sac.

Exclusivity was signed with Dovid Efune, publisher of the New York Sun, in mid-October, and then extended before coming to an end earlier this month with no deal in sight.

Efune has struggled to assemble a stable coalition of financial backers, raising questions about the logic of granting him exclusivity in the first place.

None of this has been well-received at Telegraph HQ, where journalists (and others) are increasingly restless about the fate of their employer. Some have expressed disquiet about an Efune-led Telegraph becoming more explicitly radical on editorial matters than its traditional approach.

The latest name to be floated as an alternative buyer is that of Todd Boehly, the Chelsea Football Club joint-owner. It can hardly be a coincidence that he has popped up when Raine, which oversaw the sale of the south-west London side to him, is now orchestrating the Telegraph sale.

With the government also watching closely as a result of the public interest intervention notice in place during this hiatus, the onus must now be on turning the page on a new owner – and quickly.

Tears for Ashley as Boohoo gift goes undelivered

Boohoo! So Mike Ashley didn’t get his hands on the gift he most wanted this festive season – a seat on the board of Boohoo Group. In the end, his bid was roundly rejected at last week’s shareholder meeting.

The result will have disappointed, rather than surprised, the high street billionaire, who will now try to secure alternative representation. In total, excluding Frasers Group’s Boohoo stake, Ashley scarcely mustered any support for the proposals for him and business associate Mike Lennon to be elected as directors.

Mounting another push on similar lines therefore looks futile. Such has been the enmity between Ashley and Mahmud Kamani, Boohoo’s founder, that the Frasers billionaire risks appearing to be excessively focused on a personal grudge match.

That will soon become a challenge for Sir Jon Thompson, former chief executive of the Financial Reporting Council, and soon-to-be former chair of HS2. It has yet to be announced, but Thompson will become the next chairman of Frasers.

It’s an open question as to whether controlling Mike Ashley might be a more challenging job than keeping a lid on costs at Britain’s most embarrassing large infrastructure project, but Thompson is said to have a close working relationship with the billionaire.

Nevertheless, the Boohoo farrago underlines the point that while it has made significant strides in reforming its approach to corporate governance, Frasers is not in any sense a ‘normal’ company.

Ashley’s medium-term goal must surely be to engineer a merger of Boohoo and ASOS, another online fashion retailer which has struggled badly since the afterglow of its pandemic sales surge began to fade.

Frasers owns 27% of Boohoo and 24% of ASOS, and the industrial logic of them combining is undeniable. That must be in Ashley’s unpredictable deck of cards in 2025.

Is Harbour oiling wheels of US merger?

‘Twas the night before Christmas, and all was quiet in the UK North Sea – but not for long. 
The warning from Ineos Energy chair Brian Gilvary earlier this month that government policy is forcing producers to divert investment resources elsewhere is becoming as well-rehearsed as a famous festive carol.

Gilvary is right to raise the red flag again, but of particular concern should be his suggestion that Labour does not “appear to wish to engage” on the issue.

Sticking fingers in ears about industry complaints while professing to have an open door to business is especially worrying at a time of such anaemic economic data.

There are further deals in the offing, too. After Shell’s surprising recent announcement about the combination of its North Sea assets with Equinor, London-listed Harbour Energy may also have designs on a significant tie-up. I hear that Harbour, which has a market valuation of just over £3.5bn, made a preliminary approach during the autumn to New York-listed Kosmos, which is valued at about $1.5bn.

Under the plan apparently hatched by Linda Cook, the former Shell executive who runs Harbour, it would have reversed into Kosmos.

The overture was rebuffed, according to market sources, but played a role in Kosmos’s decision to approach Tullow Oil about a recently aborted deal. The rapid collapse of the Kosmos-Tullow discussions may have now reawakened Harbour’s interest. Harbour declined to comment, but it’s another to stick on the list of oil industry consolidation plays for the new year.