US Move Fuels Fresh Rise for Sainsbury’s

By HUGO DUNCAN

SHARES in J Sainsbury continued to rise today after Texas Pacific Group joined forces with the private-equity team mulling over a Pounds 10 billion bid for the supermarket.

Sainsbury’s shares were up 31/4p to 5191/4p after the US group linked up with CVC Capital Partners, Kohlberg Kravis Roberts and Blackstone, despite suggestions it was looking at putting together its a consortium of its own to approach Sainsbury.

Goldman Sachs, which is advising the CVC-led consortium on the possible takeover, is also in talks with the firms over using its own private-equity fund to bankroll part of the bid.

The emergence of TPG and Goldman as partners to CVC, KKR and Blackstone is likely to hamper efforts by rival private-equity groups to form a competing consortium. TPG, which worked with CVC on the 2003 buyout of Debenhamshad been tipped to link up with Cinven and Bain Capital.

A takeover of Sainsbury’s for between Pounds 10 billion and Pounds 11 billion would be Europe’s largest leveraged buyout. The consortium is thought to be keen to retain current chief executive Justin King, who has taken much of the credit for the turnaround at the supermarket, which has seen its share price rise from 300p last year with the help of a high-profile advertising campaign featuring television chef Jamie Oliver.

A successful bid would give a windfall to Qatar’s ruling family after Sheik Hamad bin Jassim bin Jaber Al Thani, the Gulf state’s first Deputy pPrime Minister and Foreign Mminister, invested Pounds 90 million in Sainsbury’s through derivatives contracts.

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