UK retailer Sainsbury’s has indicated its intention to resist mounting shareholder pressure to either divide the group into two separate companies – one focusing on retail and the other on property – or sell off substantial property holdings to increase shareholder returns.
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Qatar-based investment group Delta Two, which became Sainsbury’s largest shareholder when it bought a 17.4% stake in the company last week, and property tycoon Robert Tchenguiz, who holds a 5% stake, have been calling for the supermarket chain to divide its grocery business from its estimated GBP5-10bn (US$9.97-1,028bn) property portfolio.
However, despite the mounting pressure, the group has insisted that it will continue to focus on driving forward its existing recovery programme.
“The ‘making Sainsbury’s great again’ recovery plan remains the focus of our strategy. We have indicated that we want to increase our property holdings by about 5% a year. We do obviously have a firm interest in improving our store portfolio. Management is intent on driving the best performance for our customers and shareholders and we believe this is the best way to do it,” a spokesperson for the company told just-food today (30 April).
According to a report in the Sunday Telegraph, Sainsbury’s board of directors plans to unveil plans next month to fund further investment in extending the group’s property holdings by refinancing its property portfolio either through securitisation or joint ventures.
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By GlobalDataMeanwhile Sainsbury’s chief executive Justin King said this morning that he did not feel under pressure to sell off the company’s property assets.
“I personally don’t feel under any pressure at all,” he told BBC Radio. “We have got a great business that’s been trading very strongly for about nine quarters in a row. And it’s quite clear that the reason why most people are interested in Sainsbury’s and why the value of our company is being driven up, is because the underlying performance of our company is improving and long may that continue.”
