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The proposed £500 million acquisition of the Telegraph by the American private equity firm RedBird has fallen through, leaving the 170-year-old British newspaper once again facing an uncertain future as it approaches its third year without a proprietor.

RedBird decided to terminate the deal, citing regulatory challenges and ongoing critical articles published by the Telegraph itself.

In a statement released to the Financial Times on Friday, RedBird confirmed, “We have withdrawn our bid for the Telegraph Media Group.”

Despite this setback, the company expressed optimism about the Telegraph’s prospects, stating, “We are confident that the Telegraph and its exceptional team have a promising future, and we are committed to aiding in a resolution that benefits both employees and readers.”

According to individuals familiar with the situation, the US private equity firm has begun engaging with potential new buyers.

Lord Rothermere’s DMGT, the owner of the Daily Mail, has already expressed interest in the newspaper, those people added. DMGT was not immediately available for comment.

RedBird’s decision to walk away came after founder and managing partner Gerry Cardinale determined that the growing opposition inside the newsroom of the Telegraph made it impossible to turn the deal into a success.

In recent weeks, the Telegraph published a series of opinion pieces as well as articles in its news pages attacking RedBird and its senior leadership.

Those included reporting on alleged links between the US private equity firm and the Chinese state. Despite being denied by RedBird, the reports have led to politicians in the House of Lords demanding extra scrutiny of the deal. 

People close to the sale process said RedBird executives had grown frustrated at how slowly the government had acted in putting the deal to regulators to evaluate.

The collapse of the deal extends protracted uncertainty over the Telegraph’s ownership since the newspaper was seized from its previous owners, the Barclay family, in 2023 by Lloyds Banking Group.

RedBird has been spearheading a deal to buy the Telegraph ever since. Its effort to acquire the newspaper in partnership with Abu Dhabi state-owned investor IMI was blocked in 2023 after an outcry from politicians over the risk of overseas state influence on British national newspapers.

RedBird and IMI were left with control of the Telegraph after buying its debt from Lloyds. The UK government blocked the ability to convert the debt to equity — and in effect the sale itself — leaving RedBird needing to sell the convertible debt. At the end of a second sale process, RedBird decided against selling the newspaper.

The structure of the deal that collapsed on Friday involved RedBird becoming majority owner of the Telegraph, with IMI holding a 15 per cent stake, in line with new legislation setting a limit for foreign state ownership in the British press.

DMGT and billionaire Sir Leonard Blavatnik had both also agreed to inject fresh equity in return for minority stakes.

RedBird will now need to once more kick off a sale process for the newspaper. It is uncertain whether the original buyers — RedBird and IMI — will be able to recoup the £500mn they spent on the deal.

IMI said in a statement that “we have remained in contact with a number of other parties, interest in the titles remains strong and the group’s recent accounts confirm a strong performance and value”.

It added that it would continue to “co-operate closely with the government and regulators to progress a sale”.

Rothermere has long held ambitions to bring together the Telegraph and the Daily Mail although it is not clear whether regulators would allow the two rightwing British newspapers to be owned by the same group.

Other previous bidders for the newspaper include Todd Boehly, the Chelsea Football Club co-owner, and Lord Maurice Saatchi, the former advertising mogul, with Lady Lynn Forester de Rothschild.