Sainsbury's may seek deadline on £10bn bid
The UK’s third biggest supermarket Sainsbury’s is today reported to be seeking a “put up or shut up” order if it does not receive a firm offer from its Qatari-backed suitors this week.
Sainsbury’s is understood to be growing impatient with the amount of time it has taken Delta Two to finalise its financing arrangements, the Sunday Telegraph said.
However, it is understood that Delta Two is preparing to launch its £10.6bn (€15.6bn) bid for the supermarket group within the next few days.
The firms have been locked in discussions over the last few months to try to thrash out an agreement over the price and structure of the deal.
Members of the Sainsbury’s family are understood to have been unhappy about the levels of debt involved, with Delta Two said to have been working to up the equity portion.
Delta Two has previously said it would part-finance the bid with around £6bn (€8.8bn) of debt, but this has come under increasing scrutiny in recent weeks amid the turmoil in credit markets.
Banks are demanding tougher terms as a result of the recent turbulence, and are said to be particularly nervous about whether chief executive Justin king would remain with the company if the deal goes ahead.
Mr King has been widely credited with the turnaround of the supermarket chain, but concerns over his future with the company have arisen amongst lenders following the abrupt departure of Richard Baker from his role as chief executive of Boots following its takeover by private equity group Kohlberg Kravis Roberts.
If a “put up or shut up” deadline is issued by the City regulator, Delta Two would have to launch its bid within a set period, or would be prevented from making another approach for 12 months.
An approach to the Takeover Panel would represent a distinct hardening of the mood between the two groups.
If Delta Two and Sainsbury’s do reach an agreement on terms and price - expected to be around 600p a share – Sainsbury’s could open its books for due diligence as early as this week.
Sainsbury’s has already seen off a £10.1bn (€15bn) approach from a consortium led by private equity group CVC Capital this year.
But the firm is more vulnerable this time, as Delta Two already owns a 25% stake in the company, while Robert Tchenguiz, who holds a further 10%, is understood to be prepared to back a 600p a share offer. The Sainsbury family together has an 18% interest in the supermarket chain.
Delta Two is controlled by the Qatar Investment Authority, whose chief executive is Sheikh Hamad bin Jassim bin Jaber al Thani, the prime minister of Qatar and a member of the Qatari royal family.
Neither party were immediately available to comment.
