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Goldman's odd loss of Energy

Was Goldman sleeping, did its client just not listen, or was Energy Group simply too clever? After a year of dithering, PacifiCorp let its UK target slip into Texan hands. The only thing that didn't fall through the cracks was the fees for Goldman and the other investment banks. Antony Currie reports.

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The day after losing a bidding war with US rival and eventual winner Texas Utilities, Fred Buckman, chairman of PacifiCorp, had a painful conference call with industry analysts and his own shareholders. He tried to explain why he had spent so much time and money - he admitted to between $172 million and $185 million - trying to buy the British-American utility Energy Group, only to pull out at the last minute.

And who would history judge as most responsible for this near-farce? Was it PacifiCorp for dithering and ignoring the advice of its adviser, Goldman Sachs? Was it Goldman for not pushing its client to make deal-clinching moves at the right time? Was it the winning bidder, Texas Utilities, and its advisers, Lehman Brothers and Merrill Lynch, who went on the offensive as soon as it got involved at the end of 1997, despite having no regulatory clearances? Or was it Energy Group itself, whose senior executives managed to manoeuvre the various interested parties into securing the highest price possible for the company?

Texas Utilities bid £8.40 a share for Energy Group in early March, 20 pence more than PacifiCorp's highest offer.

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