Sources said the talks were going nowhere until Lord Kirkham banned advisers from a last-ditch meeting on Friday. Then he and the DFS independent directors who had to approve any deal reached agreement.
Lord Kirkham had been scathing about the input of highly-paid advisers and had threatened to walk away from talks.
Friday's deal, announced yesterday, gives shareholders 435p per share in cash plus a 7p interim dividend already declared. That takes the total to 442p, valuing the Doncaster company at some £480m. Lord Kirkham's first offer was 415p.
Shareholders would have got the dividend anyway, so 435p is the real value of the offer. On top of that, investors will get all the proceeds from the result of a legal dispute between DFS and Customs & Excise over the VAT it should pay on sales.
The issue is whether furniture retailers who sell goods on an interest-free basis are liable for VAT on the full price or the lower amount they get from the finance houses that provide loans to customers.
What this amounts to for shareholders is anybody's guess. DFS has already had a £14m payment. Analysts say it might pick up another £20m.
It all goes in the pot to help persuade DFS independent directors to recommend the tentative offer published yesterday on the Stock Exchange.
Lord Kirkham put forward his buyout proposal in early March. He said that though DFS was the market leader in upholstered furniture – sofas and armchairs – it was being attacked by new entrants like Marks & Spencer, Next, Argos, MFI and Matalan.
He said the growth expected by the stock market would be harder to achieve in such a competitive environment and, rather than disappoint the market, it would be better to take the company private.
His first shot was widely seen as too shy. Yesterday's proposal was said to be the lowest the independent directors could go with.
They have reserved the right to consider a higher offer should one be forthcoming. As things stand, there's nobody.
DFS has to submit itself to the charade of letting Lord Kirkham, executive chairman, go through his own books in due diligence. In reality, it's his bankers Nomura who have to look at the books. Key allies like chief operating officer Jon Massey and finance director Bill Barnes are roped in because they are an integral part of the business going forward. Nomura is expected to have finished poring over the books within six weeks.
Lord Kirkham has the contract card to play with the company and its advisers. His contract runs out in December when he reaches the age of 60. If he walks away from the business he founded and grew to be Britain's biggest upholstered furniture retailer he will be a hard act to follow. If the go-private proposal founders, he'll need a pretty good new contract to stay on board.
A plastic PR statement from Lord Kirkham said: "I'm pleased we've been able to reach agreement. Due diligence by the banks will start immediately with a view to making an offer to shareholders as soon as possible."
eric.barkas@ypn.co.uk