Sainsbury's subject of £12 billion Qatari takeover bid

An offer from Delta Two has been on the cards since it built up a 25 per cent stake last month. Today Sainsbury's confirmed it has had a " preliminary approach" that "may or may not" lead to a firm offer, but gave no further details.

It is thought that Delta chief executive Paul Taylor offered the Sainsbury family 610p a share for their 18 per cent stake, valuing the company at £10.6 billion. The family rebuffed him, but may find the issue is soon taken out of their hands.

Now they are not the largest shareholders-other investors could force through a deal whether they like it or not. The key question seems to be whether Taylor can get property tycoon Robert Tchenguiz on his side.

The nature of the relationship between the two is not clear. Taylor used to work for Tchenguiz, but some City sources say they are no longer close.

Tchenguiz owns 10% of Sainsbury's shares, some through derivatives, which means together the pair could launch a near-unstoppable bid. So far, they have indicated they are not in concert, although they both favour moves to release value from Sainsbury's £9 billion property portfolio.

The Sainsbury family turned down a 580p-a-share offer from CVC in April and have been openly hostile to the idea of the company falling into the hands of private equity.

Lord (David) Sainsbury, the former finance director turned government minister, was particularly steadfast in his opposition.

The shares today jumped 81/2p to 594p as investors bet that a takeover of some sort is now likely.

Most major City investors were prepared to sell their stakes at less than 600p, which suggests the Delta Two bid would get wide support if Taylor chose to go hostile.

He has so far presented the Qataris as long-term investors supportive of Sainsbury's management, but a change of tack is possible.

Numis Securities raised its price target to 700p in light of the news.

An offer at that level - £12 billion - would probably wipe away all opposition.

Sainsbury's has retained Morgan Stanley to lead its latest attempt to fend off predators. Bankers and board members were holding talks today to discuss how best to proceed.

Chief executive Justin King has won plaudits of late for turning round a company that was losing the battle to compete with Tesco and Asda. It is now again a firm favourite of UK shoppers.

King, 45, would get millions from a private-equity takeover, but his job would be markedly less secure.

Sainsbury's has been part of British life since 1869 when a small dairy shop was opened in London's Drury Lane. It joined the stock market in 1973 in what was then the largest-ever flotation.