Sainsbury’s shares have risen 4%, amid a resurgence of market speculation that the supermarket’s biggest investor, the Qatar Investment Authority, is considering another bid.
The Qataris, which currently own a 26% stake in Sainsbury’s, made a failed bid for the retailer back in 2007. But fresh speculation has been promoted by a note from Shore Capital analyst Clive Black, who said: “With the stock trading at or around its March 2014 forecast net asset value per share, we believe that there is more merit now than has been the case for some years for Sainsbury’s largest investor to dust off ‘the file’ and consider a much more strategic investment, not least of which is an attractive annual cash return of an asset backed retailer.”
The additional Sainsbury’s share ownership is split between the family, with around 14%, and other long-term institutional investors who own the remainder.
If the Qataris bid a 20% premium to Sainsbury’s current share price of 310p (i.e. 372p), it would have to pay around £4.31bn for the outstanding 60% equity assuming the family retain their stake. In addition, it would assume £2.56bn of Sainsbury debt.
Black said the UK supermarket giant would benefit from private status at this time, which would allow management to be both more strategic and flexible against the currently challenging market backdrop. He added: “Additionally, with Justin King retiring from Sainsbury’s in July, this could coincidentally be an opportune time for broader ownership change, with Mike Coupe representing strategic and operational continuity.”