Nov 22 (Reuters) - Daily Mail owner DMGT on Saturday

said it has struck a 500 million pound ($650 million) deal to

buy the rival newspaper The Telegraph in a tie-up that would

create one of the most powerful right-leaning media groups in

Britain.

The deal comes a week after U.S.-based private investment

firm RedBird Capital Partners withdrew its bid for the

Telegraph, one of Britain's biggest newspapers.

A source close to RedBird told Reuters that sustained

internal opposition from senior figures within the Telegraph

newsroom had prompted it to walk away.

People close to the talks said the transaction was worth

about 500 million pounds. The Financial Times said the price had

been set to repay the money spent by the RedBird-fronted

consortium.

The parties have entered a period of exclusivity to finalise

the terms of the transaction and to prepare the necessary

regulatory submissions, which they expect to happen quickly.

The Telegraph did not immediately respond to Reuters'

request for comment.

A spokesman for RedBird IMI said: "DMGT and RedBird IMI have

worked swiftly to reach the agreement announced today, which

will shortly be submitted to the Secretary of State."

($1 = 0.7639 pounds)