Sainsbury’s Bid May Fail On Cash Shortage

The Qatar based firm behind the proposed takeover of supermarket giant Sainsbury’s has today said it will go ahead with plans to increase its offer by as much as £500 million, to provide more weight to its 600p per share bid.

Investment group Delta Two, funded by the Qatari royals, is hoping to offer £500 million extra in its cash offering, which must now be raised prior to the 8th November if it is to be allowed to proceed with its bid.

The Qatar government backed fund was first linked with a potential move for the supermarket chain back in July, but initial deals hit the rocks amidst fears from Sainsbury’s that the offer proposed was too debt-heavy given the current credit climate.

It has now been told by the company to make its offer more cash-based, to help minimise the risks resulting from the global credit unrest, which the fund has promised to try its best to achieve.

As a result the fund has pledged to ask the Qatar Investment Authority for the additional cash it needs to tip the scales in its favour, with a view to eventually making its final offer prior to the official deadline set for early next month.

Speaking today on the situation, a spokesperson from Sainsbury’s has said that whilst they remain open to any potential offer there is still no guarantee that Delta Two will find the extra resources by the deadline set by the Takeover Panel today.

Shares in Sainsbury’s today were down by over 3% as a result of the ongoing uncertainty, with markets left anticipating the November deadline to see whether or not any formal offer will be launched for the company.

As such, any deal looks far off completion at present, meaning Sainsbury’s could continue independently for the time being at least, despite several notable takeover approaches in recent years.

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