Sainsbury board divided over Delta Two

J Sainsbury’s directors are said to be divided over whether to accept the 600p per share takeover bid from Delta Two. The board members are taking into account the interests of all “stakeholders” in the UK-listed supermarket group, according to a source close to the family.

Some J Sainsbury shareholders are concerned that members of the Sainsbury family, who hold a combined 18% stake in the group, might block a sale.

It is believed that some board members agree with David and John Sainsbury, who claim that Delta Two has provided insufficient details of its offer. David and John Sainsbury, and some board members, also believe the offer from the Qatar government-backed investment group would load the group with too much debt.

A source close to Sainsbury told IFR Buyouts Europe that the board as yet had little information regarding debt costs, adding that the current tightening of the debt markets made it difficult for any offer that included a large proportion of debt.

The Delta Two offer values J Sainsbury at £10.4bn (€15.4bn). It is believed that Delta Two intends to set up separate property and operating entities for J Sainsbury. Under such an arrangement, the properties would be rented by the operating company from the property company. That would in turn adversely affect the supermarket’s competitiveness, say analysts, who add that the operating company could end up paying £470m in rent.