FTSE retail shares up as private equity eyes Sainsbury's
Retail shares were sent soaring today by confirmation of private equity interest in a possible takeover bid for supermarket group Sainsbury’s.
The consortium, made up of CVC, Kohlberg Kravis Roberts and Blackstone, said it was at the early stages of assessing the blue-chip company.
The news caused Sainsbury’s shares to rise by 15% and gave the FTSE 100 Index its second strong session in a row. By mid-morning, the Footsie stood 38.9 points higher at 6321.1.
The blue-chip index closed up 79 points yesterday and was buoyed early today by a positive finish to trading in New York last night.
The announcement relating to Sainsbury’s came at 9am, but shares were already 6% higher at that point as rumours swept the market. The stock then raced ahead to stand 67.25p higher at 512.5p – the highest point since 1999.
It dragged Morrisons higher with a gain of 20.5p to 304.5p, while Tesco was up 21.25p at 440.75p and B&Q owner Kingfisher rose 9.5p to 253.5p.
The other major corporate news came from British Airways, which said the threat of industrial action by cabin crew this week was likely to cost the group around £80 million. Its shares recovered from a weak start, helped by signs of strong demand for premium seats, to stand 9.5p higher at 555p.
The group also posted a fall in profits for the three months to December 31 to £113 million compared with £166 million in 2005.
In the second tier, housebuilder Bellway soared more than 4% after it announced it was on track to hit record interim profits and said it remained upbeat for the rest of the year despite recent rate hikes. It shares were 59p higher at 1486p, while other housebuilders to benefit included Bovis Homes after a gain of 45p to 1096p.
And the news relating to Sainsbury’s had a positive impact on pub companies as analysts pointed out the value of such firms as property plays – similar to Sainsbury’s. Greene King rose 55p to 1140p and Mitchells & Butlers added 24.5p to 729.5p.
