Hear Siobhan Kennedy on Sainsbury's

If Sir Philip Hampton and his management team at Sainsbury’s are disappointed about the Qataris walking away, imagine how the bankers feel.

Dozens of advisers toiled for nearly ten months to pull off Britain’s second private equity takeover of a FTSE 100 company, only to see their efforts fall at the final hurdle.

Heavy-hitters including Gavin MacDonald, global head of M&A at Morgan Stanley, and Huw Glynn Davies, a veteran of UBS, stood to gain hefty bonus packages if their advice to Sainsbury’s board had resulted in a successful takeover.

On the Qatari side, Dresdner Kleinwort, led by its global M&A chief John McIntyre, and Credit Suisse, with David Livingstone, its head of European investment banking, were each in line to net about £10 million if the QIA had won its prize.

In the wake of the credit crunch, investment banks had been having a dismal third quarter and the takeover of Sainsbury’s was seen as the one diamond in the rough. While all the other big deals had fallen by the wayside, the Qataris, with their seemingly bottomless pit of cash and reduced requirement for debt, were seen as a certainty for landing the banks their one juicy prize.

Only a week ago, the deal appeared all but signed and sealed but in a surprise turnaround, the QIA shocked the market yesterday by announcing it had pulled the plug on the deal. Even the Qataris too, it seems, have their limit.

Currently, UBS and Morgan Stanley rank as first and second respectively in the UK advisory tables, according to Dealogic, the financial data provider. So the deal would have served to solidify their position as the two top-ranking corporate advisers.

However, it would have given a boost to Credit Suisse which would have jumped from eighth to sixth and DKW, which would have risen from 22 to 21 — albeit still at the bottom of the charts.

As the investment bankers shook their heads in disbelief, some questioned the credibility of the QIA, and their intermediary Paul Taylor, for walking away at the 11th hour.

One source said: “I’m more annoyed in principle about the way they behaved. I’m surprised that they would have gone this far and then leave the company out to dry.”

Most observers expected that the pension trustees, or Sainsbury’s family, which has an 18 per cent stake, would be the ones to block the deal — in the same way the family had seen off an earlier bid by CVC, the private equity group.

But in the end, it came down to good old fashioned economics. Invesment bankers might not like it, but the Qataris, just like KKR or Blackstone, simply decided the maths didn’t work. They got tantalisingly close, but not quite close enough.

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