The next two weeks could be a defining period in Sainsbury’s history. Today, the Takeover Panel gave Delta Two, the Qatari investment vehicle hoping to acquire grocery group Sainsbury's, a deadline of November 8 to announce a firm intention to make an offer for the grocer.

If Delta Two walks away, it will be prevented from bidding again for the UK’s third-largest grocer for six months, unless a rival bid is made.

The put up or shut up ultimatum came amid signs that Delta Two could be struggling to secure its financing. Delta Two said this morning that it is seeking increased funding of about£500 million of additional equity for the proposed acquisition of Sainsbury’s, at an offer price of 600p a share.

Delta Two said it is has entered into discussions with the Qatar Investment Authority to secure such funding. But a joint statement by Delta Two and Sainsbury’s said: “There can be no certainty that such funding will be forthcoming and, therefore, no certainty that an offer will be made.”

In the short term, the two statements to the stock exchange this morning are likely to have far more significant ramifications for investors than Sainsbury’s operations ahead of the crucial Christmas trading period.

In trading this morning, Sainsbury's shares fell marginally but, if the proposed takeover collapses, Sainsbury’s share price could fall far more substantially. Some City analysts believe it will sink below 500p without the immediate prospect of some corporate action.

If Delta Two waves goodbye, Sainsbury’s will be left with three large and disgruntled shareholders: Delta Two, which holds 25 per cent of its shares, property tycoon Robert Tchenguiz and the Sainsbury family itself. It is unlikely that such diverse groups will sing from the same hymn sheet about what represents the best investment strategy for the future of Sainbury’s.

Another spanner in the works is that Delta Two is thought to have not yet struck a formal agreement with Sainsbury’s trustees, who are understood to have asked for£1.5 billion to be pumped into its pension fund.

In terms of the overall proposed deal, a Sainsbury’s spokesman said: “We are working actively together with a view to securing an offer that we believe is recommendable to shareholders.”

It is not clear what impact today’s announcement will have on the likely outcome of the proposed takeover by Delta Two, whose interest in buying the grocer for£10.6 billion first emerged in July. But Sainsbury's investors of a nervous disposition might be chewing their fingernails a little harder today.

Topics