Former cabinet minister Zahawi pulls out of ‘British bid' for The Telegraph
The decision on Saturday leaves Mr Efune with an even steeper challenge as he attempts to gatecrash the planned takeover by the US private equity firm RedBird Capital.
Mr Zahawi, his family and friends accounted for £60m of the £170m of equity it is understood had been committed to the bid.
Even before losing the support, the consortium may have needed to raise a further £200m from shareholders to deliver the £550m bid he made alongside Mr Zahawi and the hedge fund manager Jeremy Hosking.
Mr Efune has planned to complete the offer with borrowing against The Telegraph's profits.
The approach has been rejected by IMI, the United Arab Emirates state media company. It is selling The Telegraph after its own attempt to take control was blocked last year following an outcry over press freedom.
That bid was made by a joint venture, RedBird IMI, in which RedBird was the junior partner having provided 25pc of the funding. Now the US private equity firm led by its founder Gerry Cardinale is in line to become the controlling shareholder in The Telegraph in a £500m deal.
He has signalled ambitious growth and investment plans to deliver a 'global counterpunch to The New York Times' from the centre-Right of the political spectrum.
Mr Cardinale is also in talks with at least three potential British minority co-investors, who include the owner of The Daily Mail, Lord Rothermere. After a proposed easing of the outright ban on foreign state shareholdings in newspapers, IMI is expected to retain a passive stake of up to 15pc.
With longstanding business and political links to the UAE, it is understood that Mr Zahawi pulled out after becoming concerned at Mr Efune's handling of the bid.
In recent days the publisher of the New York Sun website has sought to cast his approach as more British than RedBird's and sought to cast doubt on its sources of funding and ability to run The Telegraph successfully.
IMI has come out in public support of Mr Cardinale's bid, however, and it has been unclear how Mr Efune expects to disrupt their agreement in principle. Mr Cardinale has said none of RedBird's funding for the deal is drawn from sovereign wealth.
Mr Zahawi, who was Covid vaccines minister and briefly Chancellor, has played a significant role in the two-year saga over the ownership of The Telegraph.
A friend of both the Barclay family, the previous owners, and senior figures in the UAE, he was part of setting up a complex debt repayment deal that was intended to deliver the company into the hands of RedBird IMI. It included a £600m linked to the Barclay family's online shopping business Very, which saw Mr Zahawi become chairman.
Despite the failure of RedBird IMI's takeover of The Telegraph, he has persistently sought a role in its future. In recent months he has sought to put together a new bid that would help the UAE recoup its outlay.
It is understood Mr Cardinale does not intend to involve Mr Zahawi.
Mr Efune was unavailable for comment. In his most recent statements on the bid he said was confident he would be able to announce more investors soon.
Mr Zahawi declined to comment.
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