Talks between UK retailer Sainsbury's and potential bidder Delta Two will continue next week as both sides discuss the investment fund's possible takeover offer for the company.

Sainsbury's chairman Sir Philip Hampton and Delta Two principal Paul Taylor held what have been described as constructive talks earlier this week over the Qatari-backed vehicle's proposal to buy the company for GBP10.6bn (US$21.4bn).

Delta Two, which already owns a 26% stake in Sainsbury's, outlined its plans to buy the rest of the company last month. The two sides have held a series of meetings but as yet Sainsbury's has refused to open its books.

The Sainsbury family, which owns 18% of the retailer, is believed to oppose the Delta Two proposal. There have been concerns about the level of cash Delta Two plans to borrow to fund the deal, particularly given the recent turmoil in credit markets.

Delta Two has said it would fund the offer with an investment of GBP4.6bn in equity and shares. It plans to fund the balance through securing debt finance of some GBP6bn.

Delta Two plans to spend a further GBP3.5bn over the next five years to fund store expansion, refurbishment and to extend Sainsbury's no-food business.

Officials at Delta Two and Sainsbury's declined to comment.