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April 11, 2007

UK: Private equity firms scrap Sainsbury’s bid

The private equity consortium that had been eyeing Sainsbury’s has said that it is no longer planning to make a move on the UK’s third-largest supermarket group.

The private equity consortium that had been eyeing Sainsbury’s has said that it is no longer planning to make a move on the UK’s third-largest supermarket group.


CVC Capital Partners, Blackstone and TPG Capital said in a statement that it had “become clear” that the Sainsbury’s board would not back their proposed offer.


The consortium reportedly offered 582 pence (US$11.53) per share for the chain, but CVC declined to confirm this when approached by just-food. The Sainsbury family, which owns an 18% stake in the retailer, was reportedly unwilling to consider an offer below 600 pence per share.


The syndicate said that it had pledged a major investment programme for Sainsbury’s. “We remain great admirers of Sainsbury’s, its management and employees,” the private equity groups added.


Responding to the news, Sainsbury’s said: “The consortium made a number of proposals to the board, all of which were subject to certain pre-conditions. The key pre-conditions were outside the control of the board and related to the consortium’s proposed financing structure. The board explored with the consortium whether the key pre-conditions attached to the proposals were capable of being satisfied or could be revised, but the consortium concluded that this was not possible.”


The company added: “Looking forward, the board believes that Sainsbury’s has great potential and it is committed to completing its recovery plan.”


A spokesperson for Sainsbury’s told just-food that the board had acted with the best interests of shareholders and customers in mind. “Negotiations were conducted with the interests of shareholders and customers at centre stage,” the spokesperson said.


Shares in Sainsbury’s fell 2.3% after the announcement from the consortium, dropping to 526 pence as just-food went to press.

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