Consortium 'raising Sainsbury's bid'

The private equity consortium circling Sainsbury's is said to have upped its offer for the group to more than £10bn (€14.67bn), in a move which could spark tensions between shareholders of the supermarket chain.

The consortium, consisting of CVC, Blackstone and Texas Pacific Group, raised its offer by 20p following Friday's initial approach of 562p a share, which was rejected by the board for being too low.

But the revised offer, which values the group at £10.1bn (€14.83bn), looks set to be blocked by the Sainsbury family, who have indicated they will not consider an offer below 600p.

Lord Sainsbury of Turville and his family own an 18% stake in the supermarket chain, while other shareholders, including property tycoon Robert Tchenguiz, who holds a 5% interest, are also said to be looking for offers of around 600p a share.

However, the board has reportedly signalled to the consortium that the new offer would be high enough if the Sainsbury family and other minority shareholders would be prepared to soften their position on a deal.

Sainsbury's chairman Philip Hampton is set to discuss the revised offer with Sainsbury family members after the private equity consortium said it would not table a formal takeover bid without their support.

The move follows a series of setbacks surrounding an approach for the UK's third largest retailer after the consortium struggled to reach agreement with the trustees of the supermarket chain's pension fund over a £477m (€700m) deficit.

Meanwhile, a fourth private equity firm, Kohlberg Kravis Roberts, pulled out of the consortium last week. KKR is also involved in a £10bn (€14.67bn) bid for high street pharmacist and drugs wholesaler Alliance Boots and is understood to have been concerned over the competition implications of an approach for Sainsbury's at the same time.

Reports on Monday suggested that the bidders may be prepared to offer an equity stake sweetener, which could see up to 25% of shares retained by existing shareholders and managers, to increase the appeal of a bid.

The consortium needs 75% of acceptances from shareholders for a deal to proceed and has until the end of the week to agree a price before the "put-up or shut-up" deadline imposed by the Takeover Panel.

The private equity trio first announced it was looking into the possibility of a bid for Sainsbury's at the beginning of February. Shares in the group have jumped from 445p before speculation emerged to open at 561p on Tuesday.