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Sainsbury's shares soar as bid talk grips City
Mickey Clark and Jim Armitage15 Oct 2009
Shares in Sainsbury's rocketed nearly 20% today amid feverish speculation that a £8 billion takeover bid was winging its way from Middle East.
The City rumour mill said the Qatari government's investment fund, which already holds a 26% stake in the business, was looking at launching a bid.
Talk in the market was that Britain's third-biggest supermarket, run by chief executive Justin King, was back in play, having survived two separate takeover attempts in 2007.
Those talking up the story said the bid would come in at 420p a share. At their peak this morning, the shares shot up as high as 373p before settling up 39p at 350½p.
Speculation had it that former Barclays deal supremo Roger Jenkins was acting as the Qataris' adviser.
Investors licked their lips at the thought of a deal, although cautious heads recalled how previous bids have foundered. The Qatari Investment Authority (QIA) last supported a bid two years ago through the investment firm Delta Two.
The offer was priced at £10.6 billion but was scuppered by the difficulty in raising cash for the deal due to the onset of the credit crunch.
Other analysts speculated that the Qataris could be looking to increase their stake in the business with a view to capitalising on the relatively low share price.
Traders said the speculation was gaining legs because of the renewed strength of the stock market and hopes that takeover activity could be back on the agenda again. Kraft's takeover approach to Cadbury has been seen as a sign that the big deals could be returning, despite mining giant Xstrata's decision to drop its merger plan with Anglo American this morning.
A flurry of multi billion dollar takeover deals have swept through Wall Street in the past month, mostly in the technology and pharmaceuticals areas.
Neither Sainsbury's nor the Qataris would discuss the speculation. A spokeswoman for the supermarket chain said: "We do not comment on market rumour or speculation."
Also putting a dampener on the story was the issue of the Sainsbury family, which was divided over whether to support the Qataris' last bid. The family owns 15% of the business.
Sainsbury's shares have been in the doldrums since last week's muted trading update.
Reader views (4)
If this happens - goodbye Sainsburys, we only buy British.
- Pandora, london, 15/10/2009 21:36
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Whats the point of having insider knowledge if you dont profit by it. And in anycase if it is sold to overseas investors it is because the pound is rubbish and our assets (such as our power stations) etc being bought up cheap by overseas businesses. The pound needs to go back up to €1.50 and our assets would be too expensive.
- Jim Allan, Lake District, 15/10/2009 15:37
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Yet another iconic British company at risk of falling into foreign ownership. One could always appeal to the government to prevent any takeover but they have just announced their own sale of assets which will probably be sold to foreign investors. I think we should drop the Great in Great Britain and replace it with Poor Britain
- Robin Brittain, Wolverhampton UK, 15/10/2009 15:11
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When the froth has blown away, I hope that the FSA will make the effort to discover those who started, spread and profited from the rumour. I shan't, however, hold my breath.
- Seabee, Pinner UK, 15/10/2009 14:33
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