The deal collapsed just days before the deadline for a formal, fully-financed offer from the Qataris, with Delta Two unable to get its sovereign fund-backers to stump up an additional £500m in equity to bolster the company’s pension funding. Given the swift downward turn in the markets after the debt-heavy bid was initially announced in July, it would be an obvious conclusion that the credit squeeze was the main culprit, but all parties agree that wider conditions were of minimal impact. Instead, some blame the QIA for being ill-prepared for what was always going to be a complex bid with substantial
As one partner close to the transaction comments: “Why would you choose one of the most difficult companies in the
Skadden corporate partner Adrian Knight led the
Instead it relied on barristers at Monckton Chambers and its competition team in
Whatever the reason for the collapse there is little doubt that all the advisers involved are not happy. While Linklaters, which took the lead for Sainsbury’s, wins in the sense that it keeps its longstanding client, the air of disappointment at
“What could we have done differently?” asks Linklaters contact partner Mark Stamp. “The price was a good offer so the company would have been criticised if it had not taken it to shareholders. We did everything we could to reduce the risk as much as possible before due diligence could commence — but you cannot eliminate it entirely. To get to that stage and it not go ahead is not good for anybody.”
Meanwhile, there will be four more disappointed law firms on the bid side with Shearman & Sterling, Cravath Swaine & Moore, Latham & Watkins and Sidley Austin all picking up roles for banks Dresdner and Credit Suisse. Aside from the advisers’ disappointment, it will also be interesting to judge the deal’s collapse on the credibility of sovereign-backed bidders in general. As one corporate partner who is not involved in the deal comments: “To get that far down the line and not be able to get the funding is bad. It was a bit of a learning curve for them coming in and they have not covered themselves in glory.”
