Tortoise thwarts eco-tycoon Vince with deal to buy The Observer

The Observer is to fall under the ownership of Tortoise Media, a fledgling digital start-up, in a binding deal signed after weeks of controversy about the fate of the world's oldest Sunday newspaper.

Guardian Media Group (GMG) and the Scott Trust announced on Wednesday morning that the title will be acquired by Tortoise, even as the eco-tycoon Dale Vince made a last-ditch bid to wrest control of it.

In a letter sent to Guardian bosses on Wednesday and seen by Sky News, Mr Vince pledged to operate the Observer from within the Green Britain Foundation in order to replicate its current trust-based ownership structure.

Mr Vince has been involved in an increasingly vocal public battle with the newspaper's existing owners about his interest in acquiring it.

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In his letter on Wednesday, the Ecotricity founder also said he would retain the Observer's print edition and pointed out that a deal involving him would not require additional external investment.

Announcing the deal with Tortoise Media, GMG said that Lucy Rock had been appointed editor of the print edition of the Observer, making her the first woman to oversee the newspaper in 100 years.

Tortoise has promised to invest £25m in the Sunday title, of which £5m will come from the Scott Trust.

"This deal secures fresh investment and ideas for the Observer that will take the title to new audiences and enhance the role liberal journalism plays in our society," Ole Jacob Sunde, chair of the Scott Trust, said:

"We have taken steps to enshrine our values in the new ownership structure and the Scott Trust will continue to play an important and active role in the Observer's future through an ownership stake and board membership."

The prospect of the deal triggered the first strike action by Guardian and Observer journalists for decades.

Mr Vince joined them on the picket line last week, and had expressed serious interest in buying the Observer prior to Wednesday's letter, according to those close to him.

A union meeting to discuss further industrial action is scheduled for Friday, according to insiders.

The deal with Tortoise places the Observer in new ownership for the first time since the early 1990s.

Founded in 1791, its takeover by a digital media startup underlines the shifting dynamics sweeping the global news media landscape.

A Tortoise Media spokesman said its investors had committed to a fresh funding round regardless of whether the Observer deal had gone through.

The standalone business was on track to break even in the fourth quarter of this year and to achieve profitability next year, the spokesman added.