Qatari royal family shopping at Sainsbury's again?

Shares in J Sainsbury are soaring on rumours of another bid from the Qatari government.

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Last Updated: 06 Nov 2012

Shares in the UK’s third-largest grocer were up over 12% this morning at around 350p, as talk of a takeover attempt at as much as 420p a share stoked speculation in an already bullish market. If it’s true – an important proviso as neither party has so far made any statement – that would represent a pretty tasty premium on the current market value.

For those of you with short memories, the Qatari authorities have already had a stab at buying Sainsbury’s, in the heady boom days of 2007. That £11bn proposal was derailed by the rather swift onset of the credit crunch, as well as the uphill task of persuading the Sainsbury family to sell up. The attempt left the Qatari’s with a hefty 26% holding, so it’s not that much of a surprise if they are back again, this time to try and seal the deal.

Now it’s the $59bn sovereign wealth fund the Qatari Investment Authority in the driving seat, last time it was their investment fund Delta (Two). But since they are both backed by the emirate’s top government ministers and royal family, it doesn’t really make much difference in terms of who is calling the shots.  

As far as we can recall, the Qatari Emir himself, Sheikh Hamid Bin Halifa Al Thani, is rumoured to be a big fan of Sainsbury’s Taste the Difference range. A latter day Victor Kiam perhaps? (The man who liked the product so much, he bought the company).

As well as plenty of interest from speculative investors wanting to ride on the coat tails of the price rise, there’s a good deal of more considered scepticism about the practicalities of any deal. The leveraged buyout market isn’t quite what it was, and £5bn is a lot of money for even the QIA to find down the back of the sofa.

But Sainsbury’s is trading well, and since that abortive 2007 attempt valued the firm at 600p, at 420p it looks like a bargain. And as every cash-strapped recesssion shopper knows, you can’t afford to turn your nose up at that kind of value for money these days.

 

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