Hollinger International, the publishing group behind the UK's Telegraph titles and the Chicago Sun-Times, could face punitive tax liabilities from a proposed break-up or piecemeal disposal of its newspapers, claim those backing a $466 million (€372 million) bid for Hollinger's controlling shareholder.
The warning follows the distribution of confidential information by Lazard, the investment bank acting for Hollinger International, on the potential sale of titles including the Daily Telegraph and Jerusalem Post.
A break-up of the US-listed newspaper group could derail a separate takeover offer from the UK's Barclay brothers for Hollinger Inc - the parent company controlling 30 per cent of the publisher's equity and 73 per cent of its voting rights.
The approach by the Barclays - who already own UK newspapers such as the Scotsman and the Business - is supported by Lord Conrad Black, former chief executive of Hollinger International and current chairman of Hollinger Inc.
A source close to Lord Black claimed Lazard had warned Hollinger directors an auction of separate assets would not be tax efficient, even before the Barclays' bid was made public.
Officials close to the Barclays believe tax consequences from a break-up "could run to hundreds of millions of dollars". The Barclays hope to avoid a competitive auction but UK newspaper groups including Daily Mail & General Trust and Express Newspapers have requested sales information from Lazard. - (Financial Times Service)
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