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The board of J Sainsbury is to put pressure on the private equity consortium stalking the supermarket group to flesh out its plans for a possible £10 billion ($28.6 billion) takeover offer amid speculation that rival bidders are also vying for the chain.
CVC, Blackstone and Kohlberg Kravis
Roberts, the trio forced to confirm their intentions last week, are thought to be considering an offer pitched at £5.50 per share.
But rumours that other bidders are also circling could thwart the consortium's plans because that would put a further rocket under Sainsbury's shares, which rose 14 per cent last Friday, lifting the group's value beyond their reach.
Texas Pacific Group has been linked to Sainsbury's, although a source close to the US buyout fund played down its interest late last week. Several recent private equity approaches have failed because of early leaks, including ones to Signet and Kesa Electricals.
Weekend reports that the CVC consortium has approached Allan Leighton, the Royal Mail chairman, and Archie Norman, the former Energis chairman, about joining their bid are off the mark.
If the consortium does make an approach it is likely to want Justin King, the chief executive who has transformed the business since joining in March 2004, to stay on.
A successful bid would net King more than £10 million according to the terms of his contract.
The consortium's plans are believed to centre on the potential for expanding Sainsbury's high-margin, non-food ranges.
Sainsbury's three-year recovery plan to increase sales by £2.5 billion has factored in £700 million from non-food sales. It would like to increase its non-food business further but cannot because its stores are too small.
The rating agency Fitch said that a leveraged bid that relied on unlocking property value from Sainsbury's 750-strong chain could "jeopardise" its recovery, adding: "The usual near-term exit for private equity players is less than clear."
Sainsbury's board, which is chaired by Sir Philip Hampson, will not want the uncertainty over its future to distract its employees, from King down, from delivering the final and most crucial element of its recovery: the profits.
If it does not hear from the consortium, which is advised by Goldman Sachs and Lazard, by the middle of the month it is likely to ask the Takeover Panel to intervene.
This month Lord Sainsbury, the former science minister, will regain control of his 13.8 per cent stake in the group for the first time since 1998.
The date that the blind trust, set up when he joined the Government, will be wound up has not been decided.
- INDEPENDENT
