Ex-ASDA boss to lead Sainsbury's takeover bid

Former Asda boss Allan Leighton is set to lead a takeover bid for struggling UK supermarket chain Sainsbury’s, reports today said.

Mr Leighton, currently chairman of Britain'sRoyal Mail, has funds in place and is poised to make a £5 billion offer within weeks, Sunday newspapers reported.

One report said Mr Leighton had already approached the Sainsbury family - which holds a 34% stake in the group – about an offer, while another said private equity investors were planning to approach the family about a bid led by Mr Leighton.

The reports follow news on Friday that Sainsbury’s was lining up a team of bankers to defend itself against a potential bid.

Sainsbury’s today refused to elaborate on the reports. “We don’t comment on market speculation,” a spokeswoman said.

The Financial Mail on Sunday reported that three of Mr Leighton’s former Asda colleagues - chief executive Justin King, trading director Mike Coupe and customer services director Gwyn Burr - would remain at the group if his bid succeeded.

Mr Leighton had been in regular contact with Mr King since the latter took up his position at Sainsbury’s in March, the Mail said.

While Mr Leighton would prefer to make a 300p-a-share offer in the New Year, after the key Christmas trading period, sources said he could make an offer almost immediately if a rival bid emerged.

Another newspaper, The Business, reported that large private equity groups including Permira, Apax Partners and Kohlberg Kravis Roberts had talked about forming a consortium to back a bid fronted by Mr Leighton in which each would put up between £250m (€359.1m) and £1bn (€1.4bn).

The Sunday Times said Mr Leighton could be drawing up plans to parachute a new management team into Sainsbury’s rather than launching an outright bid. And the Sunday Telegraph said Mr Leighton, who has stepped down from his non-executive directorship of lastminute.com, has spoken to his former Asda colleague, Archie Norman – who is stepping down as Conservative MP for Tunbridge Wells at the next election – about the possibility of working together on potential deals.

Earlier this month, attention focused on City financier George Magan after he was reported to have approached banks and private equity groups to secure finance for a bid.

Sainsbury’s has slipped to third in the UK supermarket pecking order behind Tesco and Asda, with like-for-like sales falling a further 1.1% in the 16 weeks to October 9.

The supermarket chain has fallen behind in the face of problems with its distribution systems and competition from rivals who have moved into lucrative non-food areas such as clothing and financial services.

As part of a recent recovery plan outlined by chief executive Justin King, the retailer said it would adopt a back-to-basics campaign called Making Sainsbury’s Great Again.

The plan involves the recruitment of 3,000 extra shop floor staff to keep shelves better stocked, improving food quality and downsizing home ranges.

As well as his chairmanship at lastminute.com, Mr Leighton last week gave up the chairman’s position of Cannons health clubs and a non-executive boardroom position at the household appliances group Dyson.

However, Dyson said in a statement today that Mr Leighton would continue to work in a consultative capacity for the vacuum cleaner manufacturer in the United States.