RedBird IMI said it would sell the Daily Telegraph newspaper group on Tuesday, after it decided to withdraw from its proposed acquisition because government intervention meant the deal was "no longer feasible".
Abu Dhabi-backed RedBird IMI effectively took control of the Telegraph newspapers and the Spectator magazine in December when it repaid owner the Barclay family's debts, including a 600 million pound ($753 million) loan against the titles.
But the acquisition, which already faced a lengthy regulatory inquiry, was dealt a final blow last month when Britain said it would stop foreign governments owning newspapers.
"RedBird IMI has today confirmed that it intends to withdraw from its proposed acquisition of the Telegraph Media Group and proceed with a sale," a RedBird IMI spokesperson said.
"We have held constructive conversations with the government about ensuring a smooth and orderly sale for both titles."
RedBird IMI, led by former CNN executive Jeff Zucker, is backed by Mansour bin Zayed Al Nahyan, a member of Abu Dhabi's ruling family and the owner of Manchester City soccer club.
The focus now, RedBird said, was on securing the best value for right-leaning Daily and Sunday Telegraph newspapers and Spectator magazine, seen as close to the ruling Conservatives.
Parties previously interested in the assets include hedge fund boss Paul Marshall, Daily Mail owner DMGT as well as private equity buyers.
