Delta bids for Sainsbury's
Against the backdrop of the worst week in the UK stockmarket since 2003, the Qatari royal family, via its investment vehicle Delta Two, has bid £310.6bn - 600p per share (plus 7p per share dividend) - for J Sainsbury.
Delta Two has a 25% stake in J Sainsbury, while the Sainsbury family controls nearly 18%. Robert Tchenguiz, the property entrepreneur, is thought to hold the key to the deal as he controls about 11% of Sainsbury's equity.
It is understood that Delta Two wants to finance the deal via £38.3bn of debt plus £33.7bn worth of cash. There is speculation that former Asda director Tony Campbell is being lined up to take over as Sainsbury's chairman if the Qatari bid is successful. It is believed that over half of City institutional shareholders are in favour of the Qatari offer.
However, it is reported that Lord David and John Sainsbury, who together control 15% of the 18% family shareholding, have written to Delta seeking answers to some key questions. Foremost among these is why Delta plans to impose £36bn of debt on the group when it does not plan to spend any more money fine-tuning the business than the current management has earmarked.
They also want to know if Delta plans to sell Sainsbury's freehold properties, a move they oppose, and they want assurances that Delta will ring-fence the company's £34.5bn pension fund.
So far, it is believed the response received has been too vague to persuade all the Sainsbury family to support the bid. Market pundits reckon the family want to secure a higher offer, although the Qatari stake of 25%, is a formidable deterrent to another bidder.
Meanwhile Northern Foods is battling grimly on in the face of rising commodity prices and pressure from supermarkets to keep prices down. But it has seen a rise in underlying revenues and profit margin improvements in the first quarter.
Revenues rose by 2.6% in the 13 weeks to the end of June 2007. Overall profit margin for the period was up on the previous year and Northern is benefiting from lower interest payments as its debts have been reduced by sales of non-core businesses.
Wm Morrison saw like-for-like sales in the 23 weeks to 15 July up 3% - better results than the market expected in view of the fact that, last year, the World Cup boosted sales and, this year, poor weather has hit sales.
With £31bn of freeholds under its belt Morrisons is in a good position to wipe out debts or launch a major share buy-back programme.
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