LONDON (AFP) – The Gulf state of Qatar on Friday tightened its grip on J Sainsbury, Britain’s third biggest supermarket chain, by raising its stake to 25 percent, sparking speculation it may launch a takeover.
Delta Two, an investment fund backed by the Gulf state of Qatar, said in a statement that it had bought an extra 123 million shares in J Sainsbury, or 7.0 percent of the group, at a price of 595 pence per share.
Analysts speculated that Delta wanted the group to unlock the value of the chain’s property portfolio.
“We do not know Delta’s intentions but this could be a precursor to a full bid,” broker Citigroup said in a research note.
Citigroup believes that with Delta apparently focusing on property and Sainsbury’s management and the founding family opposed to stripping property out, there “could be a conflict between shareholders and management.”
Sainsbury, which issues a trading update next week, has ruled out disposal of its property estate.
Added to 300,000 shares already owned by Qatar Prime Minister Sheikh Hamad bin Jassem bin Jabr al-Thani, and combined with Delta Two’s existing stake, the gas-rich state now owns 25.007 percent of the supermarket company.
News of Qatar’s fresh investment on Friday sent Sainsbury shares surging to a record 599 pence on London’s rising FTSE 100 index.
The stock later stood at 594 pence, an increase of 5.13 percent from Thursday’s closing level, giving the group a market capitalisation of some 10.4 billion pounds (15.4 billion euros, 20.5 billion dollars).
Qatar became the leading shareholder in J Sainsbury last April when Delta Two snapped up an initial 17.4-percent stake.
The Sainsbury family, which founded the group in 1869, has a declared stake of about 14.0 percent.
Earlier this year, J Sainsbury snubbed a consortium takeover bid, which was said to be worth about 10.1 billion pounds, from private equity groups Blackstone, CVC and Texas Pacific Group.
Sainsbury employs 155,000 staff and has 769 supermarket branches across Britain.
The supermarket chain is the third largest in the country after sector leader Tesco and number two Asda, which is owned by US giant Wal-Mart.
Last month, Sainsbury posted a five-fold increase in net profits during its fiscal year.
The retailer also unveiled a new three-year recovery plan, during which time it intends to grow sales by 3.5 billion pounds.
J Sainsbury saw net profits rocket to 324 million pounds during the 12 months to March 24, 2007, compared with 58 million pounds during the same period a year earlier. Revenue rose 6.8 percent to 17.15 billion pounds.