Iranian tycoon eyes Sainsbury's –

Iranian tycoon eyes Sainsbury’s Published:  07 March, 2007

THE Sainsbury supermarket saga took on an intruiging new twist last night with the news that Iranian property tycoon Robert Tchenguiz had increased his stake in the company – raising speculation of a bid from a new and unexpected direction.

The development came just hours after the consortium of private equity groups stalking J Sainsbury had been given six weeks – until April 13 – to come up with an offer for the supermarket group or walk away. The so-called “put-up-or-shut-up” deadline was imposed by the Takeover Panel after the supermarket group appealed for a ruling. Shares in Sainsbury increased by three per cent yesterday

The consortium – led by Blackstone group and including CVC Capital, Kohlberg Kravis Roberts and Texas Pacific, two of the names reported to be interested in Birds Eye last year – admitted it was considering a bid for the food retail giant.

Sainsbury’s is the UK biggest seafood retailer, buying 55,000 tonnes of fish a year, mainly from UK processors on the Humber and in Scotland who are watching the situation carefully.

The intervention of the Iranian Mr Tchenguiz is an interesting one because he owns a major stake in the Somerfield supermarket group, which tends to run mainly medium sized and smaller in-town stores, also seafood retailers.

Mr Tchenguiz’s intentions towards Sainsbury’s are still unclear although it is understood that he added the supermarket to his stakebuilding “as a matter of courtesy” before notifying the Stock Exchange.

Sources close to the businessman have dismissed speculation that he was planning to merge Sainsbury’s and Somerfield, which he bought with Apax Partners and Barclays Capital in a £1.8 billion deal in October 2005. They refused to comment on rumours that he was eyeing Sainsbury’s property portfolio, estimated to be worth between £3 and £8 billion at the latest estimate. They said that Mr Tchenguiz was “keeping all his options open”. Alongside his brother, Vincent, Mr Tchenguiz made his original fortune in the property market. The pair are now worth an estimated £490m.

A number of analsysts have recent doubted whether the CVC-led consortium will actually go ahead with a bid, particularly after the GMB union’s attack on private equity after the Birds Eye sale had increased the risk of a protracted public process.

If the consortium does not make a firm offer by 13 April, it would be prevented from making a fresh bid attempt for six months, apart from under special circumstances such as a rival offer being made, the Takeover Panel said. A spokesman for the supermarket chain said that due to the uncertainty in the market it was “felt appropriate to seek clarification around the timetable”.

Last week, Marks & Spencer said it reserved the right to bid for Sainsbury if CVC makes a formal offer or if the grocery chain’s board recommends a takeover, although it didn’t plan an immediate bid. This followed comments made by M&S’s chief executive, Stuart Rose, who indicated he was considering a bid. is published by Special Publications. Special Publications also publish FISHupdate magazine, Fish Farmer, the Fish Industry Yearbook, the Scottish Seafood Processors Federation Diary, the Fish Farmer Handbook and a range of wallplanners.