Sainsbury's targeted by new £12bn bid

by Staff, Brand Republic 18-Jul-07, 09:10

LONDON - Sainsbury's is considering a £12bn takeover bid that has been tabled by a Middle East investment fund, which is backed by the Qatar Royal family.

Sainsbury's, which is the UK's third-largest supermarket behind Tesco and Asda, has been approached by a group called Delta Two with an offer of 610p a share, according to reports.

The news has pushed Sainsbury's shares up slightly this morning by 1.62% to 595p a share.

Delta Two already owns 25% of Sainsbury's after buying up shares in recent weeks. Last month it bought a further 7%. The latest bid follows that of a private equity consortium CVC, which eventually pulled out of a £10.1bn bid in April, after the Sainsbury family refused to back the deal.

In a brief statement from Sainsbury's, the retailer said: "J Sainsbury plc confirms it has received a preliminary approach from Delta (Two) Limited, which may or may not lead to an offer being made for Sainsbury's. The board will make a further announcement, as appropriate, in due course."

Delta Two has said nothing of its intentions, but previous bid speculation has centred on the retailer's property holdings, which are said to be worth almost £9bn and provide a potential windfall for investors.

However, the Sainsbury's board has previously dismissed such a strategy for fear of being saddled with sky-high rents.

Analysts are looking on this latest bid favourably because of the big premium it represents.

A further indication that the bid could go ahead is the willingness of Sainsbury's management, headed by chief executive Justin King, to discuss the Delta Two offer.

The Sainsbury family, which owns around 18% of the company, could be a sticking point. It has not embraced the deal.