Sainsbury's opens books to Delta Two

Sainsbury’s is opening its books to Delta Two, the Qatari bidding vehicle interested in the grocer, following the submission of a revised proposal incorporating an increase in the equity proportion of the offer.

Delta Two’s new scheme of 600p per share and an£850 million increase in offer funding, by way of ordinary and preference shares. The change means a total of£4.85 billion funding will be through such shares and payment-in-kind notes. If the deal goes ahead, Tony Campbell, former deputy chief executive of Asda, would become non-executive chairman of Sainsbury’s. Delta Two’s business plan also forecasts£3.5 billion of capital investment over the next five years, which will fund store expansion, refurbishment and the further development of the non-food offer.

Paul Taylor, principal of Three Delta and strategic investment adviser to Delta Two on the proposal, said: “We are very pleased to have reached agreement with the board on a process for due diligence. This is an important next step in our progressing a possible offer for the company.”

Sainsbury’s chairman Sir Philip Hampton said: “We have held extensive discussions with Delta Two over a number of weeks and believe that their revised proposal is comprehensive and, if it results in an offer, that offer would be recommendable to shareholders.”

He added: “No decision has been made regarding any possible offer and accordingly there can be no certainty that any offer for Sainsbury's will be made.”

Delta Two said it would maintain existing cash benefits for employees and introduce performance incentives. The fund also said it would “work constructively” to reach agreement with Sainsbury’s pension fund trustees about funds for the scheme.