SAINSBURY takeover battle reaches new high

The takeover battle for UK retailer Sainsbury last night intensified after the CVC led consortium raised its bid to GBP5.82 (USD11.42) a share. While the Sainsbury board signalled to the consortium that the price was high enough, it also warned that the deal was still not achievable because of the Sainsbury family’s position on price.

It is thought the board will meet today to discuss the verbal offer, having rejected a GBP5.62 (USD11.02) per share indicative bid last Friday. Sir Philip Hampton, chairman, will put the revised offer to the Sainsbury family members to see if they will soften their hardline stance. Lord David Sainsbury of Turville has made it clear all along that he will not even consider selling his 7.75% cent stake for less than GBP6.00 (USD11.77). John Sainsbury, Baron Sainsbury of Preston Candover, who controls just under 3%, refuses to sell at any price. At the end of last week, Kohlberg Kravis Roberts confirmed that it had dropped out of the CVC led consortium.

Hopes of an agreement now look remote ahead of this Friday’s “put-up or shut-up” Takeover Panel deadline. It is also understood Sainsbury's will now hold a review of its entire property portfolio. The company is considering a sale-and-leaseback of some of its stores. The board of Sainsbury's is also likely to consider a refinancing plan for the properties, where it would sell bonds secured by commercial mortgages on a number of its properties. This commercial mortgage bank security (CMBS) model was used last February when the company unveiled a massive deal. A spokesman for Sainsbury's said he could not comment on market speculation or rumour, but said: "We were very pleased with the CMBS deal last year and it was generally considered to be very innovative and successful.''