Sainsbury’s, the UK’s third-largest retailer, has refused to be drawn on local reports that its board will this week recommend the GBP10.6bn (US$21.6bn) proposed offer from investment fund Delta Two.
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The company stayed tight-lipped when contacted by just-food this afternoon (8 October) over reports in the UK that claimed a recommendation was imminent.
Three weeks ago, Sainsbury’s decided to open its books to long-time suitor Delta Two, the Qatar-backed hedge fund.
Sainsbury’s and Delta Two have been locked in discussions since July when Delta Two tabled its first proposal to buy the retailer. Delta Two has yet to table a firm bid for Sainsbury’s; up to now, talks between the two sides have foundered on the amount of debt in the fund’s proposal.
The breakthrough on due diligence came after the fund upped the equity portion in its proposal. Under Delta Two’s original plan, the fund indicated it would fund the bid with an investment of GBP4.6bn in equity and shares, with the balance coming from debt finance.
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By GlobalDataBut Delta Two increased the equity in its proposal; offering Sainsbury’s a further GBP850m in shares. The fund insisted these additional shares would be guaranteed by the Qatari government.
It is believed that Delta Two has yet to reach an agreement with Sainsbury’s pension trustees, who are said to be demanding that the fund promises cash of GBP1-2bn.
Officials close to Delta Two could not be reached for immediate comment.
Sainsbury’s will give an update on trading during its second quarter on Wednesday (10 October).
