Sainsbury's 'steps closer' to opening books

UK supermarket group Sainsbury’s has edged closer to opening its books to the Qatari-backed fund pursuing the retailer, it was reported today.

Delta Two is understood to have offered to up the proportion of equity in its £10.6bn (€15.6bn) bid proposal, according to the Financial Times.

The structure of the bid has been a persistent stumbling block to the deal, with members of the Sainsbury’s family said to be concerned about the high levels of debt involved.

Additionally, the UK’s third biggest supermarket has been reluctant to open its books to Delta Two unless it can be sure a formal offer will emerge.

Delta Two has previously said it would part-finance the bid with around £6bn (€8.8bn) of debt, but this proportion of debt has come under increasing scrutiny in recent weeks amid the turmoil in credit markets.

The two sides have reportedly been in talks over the past few weeks as they try to thrash out an agreement over a potential deal, including a potential cash injection into Sainsbury’s pension fund.

Sainsbury’s had also been unhappy over the 600p-a-share price tag, although this is said to have become more attractive following the recent stock market volatility.

According to the Financial Times, Sainsbury’s could open its books for due diligence as early as next week, which would be widely regarded as a signal that the board believes a deal can be completed.

Delta Two already holds a 25% stake in the business while the Sainsbury family owns around 18% of the firm’s shares.

Delta Two is controlled by the Qatar Investment Authority, whose chief executive is Sheikh Hamad bin Jassim bin Jaber al Thani, the prime minister of Qatar and a member of the Qatari royal family.

Neither party were immediately available to comment.

Delta’s approach is the second attempt to buy Sainsbury’s this year after a consortium of private equity giants led by CVC Capital approached the group with a £10.1bn (€15bn) indicative offer for the company in February.