Three Delta ups stake in Sainsbury’s to 25%

The investment vehicle of Qatari property investment fund Three Delta has upped its stake in Sainsburys. The FTSE 100 listed UK supermarket’s shares leapt by nearly 5 percent, as speculation suggested a takeover bid was forthcoming.

Delta Two, the investment vehicle of Qatari government-backed property investment fund Three Delta, has upped its stake in UK supermarket J Sainsbury to 25 percent.

The Qatari company bought a further 7.1 percent of the supermarket at 595p per share for £732 million ($1.4 billion €1.1 billion), confirming the investor as the largest shareholder in the company. Property entrepreneur Robert Tchenguiz owns a further 5 percent of the company.

Tchenguiz is also the owner, with his brother Vincent, of the Rotch Property Group.  Former chief executive of Rotch, Paul Taylor, runs Three Delta.

If Tchenguiz works alongside Three Delta, as market reports suggest he will, the group will be obliged to make an offer for the company. In the past Tchenguiz has denied he is working with the Qatari investment group.

The British supermarket’s shares rose by 4.78 percent to £5.92 at 1343 GMT having hit a year high of £5.99.  Sainsbury’s £8.6 billion real estate is believed to be the target of the shareholders.

The supermarket rejected a £5.82 per share bid led by global private equity group CVC Capital Partners in April. CVC was accompanied on the bid by US buyout firms Blackstone, KKR and TPG. The consortium fell apart when KKR decided to pull out on 5 April with Blackstone and TPG following suit five days later. CVC abandoned its bid the day afterwards on 11 April.

The founding Sainsbury family who control about 18 percent of the shares strongly resisted the buyout firms’ approach. Some of the family expressed an unwillingness to sell at any price, while Lord Sainsbury of Turville, who owns a 7.75 percent stake, refused to consider any bid below £6.00 per share.

Tchenguiz said in April, shortly after he bought his stake, he would like the supermarket to take advantage of new legislation that allows companies to establish a real estate investment trust providing tax discounts on property. This move was rejected by the Sainsbury board in May after it issued a strong trading statement.