Sainsbury´s: one step nearer to takeover

London / UK. (js) J. Sainsbury PLC and Delta (Two) Limited are jointly providing an update on their discussions concerning the possibility of Delta making an offer to acquire all of the issued and to be issued ordinary share capital of Sainsbury´s which it does not already own, at a price of 600 British Pence in cash per ordinary share.

Sainsbury could be in the hands of its Qatari suitors by Christmas after the supermarket´s board now confirmed it had opened its books to Delta, a vehicle of the Qatari royal familyo, the state-backed fund which is planning a 10.6 billion GBP takeover bid.

However, investors appeared to retain some scepticism that a formal bid would emerge with shares rising by just two percent to 565 Pence, below the 600-Pence-a-share bid price.

The chief concern is whether Delta can secure agreement with Sainsbury´s pension fund trustees, who are thought to want between two billion GBP and three billion GBP in cash up front to underpin retirement benefits for the scheme s 85.000 members.

Commentators said Delta Two had a stronger position to cut a deal with the trustees having increased the equity in its offer to 4,9 billion GBP, and made clear it planned to retain ownership of Sainsbury´s valuable property portfolio. In a statement Delta said it would work «constructively» with the trustees to reach agreement.

The good news for Delta Two is that the Sainsbury family, who retain an 18 percent share in the company, appear to be comfortable with the 600-Pence-a-share bid price, particularly as the fund has confirmed plans to include a three-Pence-a-share dividend in respect of the period ending October 6th.

Delta Two is expected to take about three weeks to complete due diligence and an offer is likely to be put to be put to shareholders by mid October. The offer would take 60 days to complete, so that if everything runs smoothly it could be completed by mid-December (press release).