Christie's talks collapse as private investors fail to hammer out a deal

Christie's, the auction house, yesterday ended talks with a consortium led by SBC Warburg Dillon Read regarding a possible recommended offer for the company.

The talks broke down on price with the investment banking group offering only around 270p-280p per share, valuing the company at just pounds 460m-470m. This was much lower than previous estimates of the bid which put the offer at around pounds 500m, or 300p per share.

The consortium's offer was little higher than yesterday's closing price of 265p, up 5p on the day. But Christie's shares had no chance to react to the statement as it was issued after the market had closed yesterday afternoon.

"We've had some talks and the mood was constructive but the two parties have not been able to agree a proposal which the Christie's board would have been able to recommend to shareholders," said finance director Peter Blythe. "We have been a public company for 25 years and life goes on. It is business as usual."

The Warburg consortium featured a group of six high net worth individuals which included Joe Lewis, the Bahamas-based investor who already owns 29.9 per cent of the auction house. Mr Lewis, who last year bought a stake in Glasgow Rangers football club, has been keen to increase his holding but under stock exchange rules could only do so if he made a bid for the whole group.

It is thought that the break-down of yesterday's talks marks the end of the consortium's interest and that it will not return with revised terms. "We have always said that we would only proceed on a recommended basis and as that has not been possible we have withdrawn," a Warburg spokesman said.

SBC Warburg's softly-softly approach has caused some puzzlement in the City as its approach to Christie's was led by Brian Keelan, the swash- buckling, corporate financier who successfully defended the Co-op last year from the pounds 1bn bid from Andrew Regan.

Mr Keelan is best known not for agreed bids but for high profile hostile ones such as Trafalgar House' s tilt at Northern Electric. He has also developed a reputation as an innovative financier who is keen to explore new ways of structuring deals.

Part of the attraction of Christie's to potential bidders has been its mailing list which includes many of the world's wealthiest individuals. Christie's would also have been able to use SBC's financial muscle to underwrite auctions of valuable art collections.

Christie's sales last year overtook those at Sotheby's for the first time in 44 years. It will report its full-year results today with analysts expecting profits of pounds 40m.