Sainsbury bid could be imminent Published: 05 April, 2007
SPECULATION was mounting this afternoon that the private equity consortium circling supermarket chain Sainsbury’s could table an indicative £9.5 billion offer as early as before the Easter weekend.
It is understood the group, led by CVC Capital, some of whose members were once in the frame for Birds Eye, is planning to approach the chain’s board with an informal offer of around 550p a share as the April 13 “put up or shut up” deadline set by the Takeover Panel looms.
But it is suggested that the consortium has so far failed to reach an agreement with the supermarket’s pension trustees over a potential £3 billion funding deficit, which has been seen as a possible stumbling block to any deal. An indicative offer for Sainsburys, of around 550p a share, is expected to be filed with the supermarkets board possibly later today despite the withdrawal today of KKR from the bid consortium.
The consortium has yet to reach agreement with Sainsburys pension trustees over the funding of a £410 million deficit. However, the group is under pressure to file an indicative offer in order to gain Sainsburys support for an extension to the April 13 deadline for a fully funded bid. Kohlberg Kravis Roberts, the private equity company, has withdrawn from the CVC Capital-led group mulling a £9.5 billion takeover bid for J Sainsbury, which is Britain’s largest retail buyer of fish and seafood. KKR is also reported to be concerned about the price being discussed by the group eyeing Sainsbury.
The group, now comprising CVC, Blackstone Group and Texas Pacific Group, has until April 13 to launch a formal offer for Sainsbury under a timetable set by the Takeover Panel. The withdrawal of KKR has been expected since the firm announced plans to bid for Boots in early March. Without KKR the other consortium partners will either have to raise the level of equity they put in or recruit another firm to help.
The revelation came as figures from TNS, the market research company, revealed that Asda and Sainsbury were growing faster than Tesco. According to TNS, year-on-year Asda and Sainsbury saw growth of 9% and 8% respectively including in food and seafood. Tesco saw growth of 7% year-on-year.
Andy Bond, Asda’s chief executive, said: “It is very good news. We are in good health.” Edward Garner, director research at TNS, said: “These figures again show the buoyancy of the grocery (food and seafood) sector in stark contrast to some of the tales of woe emanating from the rest of the high street.”