US private equity firm Texas Pacific Group has decided to join forces with the consortium of buyout heavyweights preparing a £9 billion bid (€13.6 billion; $17.7 billion) for UK retailer Sainsbury’s, rather than forming its own rival bidding group.
CVC Capital Partners, Kohlberg Kravis Roberts and the Blackstone Group said last week they were considering a bid for Sainsbury’s, which at about £9 billion would be Europe’s largest leveraged buyout to date.
TPG had been rumoured to be joining up with Cinven and Bain Capital to make a competing bid, but the US group has decided to throw its lot in with the original group. This means Cinven and Bain Capital will probably have to find an alternative partner if they want to put together an offer.
TPG and CVC have previously worked together on the extremely successful take-private of UK retailer Debenhams in 2003. The two firms, along with Merrill Lynch Private Equity, shared a return of about £2 billion after refinancing the company twice and later returning it to the public markets.
Goldman Sachs, which is advising the CVC-led consortium on its bid, is also expected to contribute equity to the deal through its own private equity fund, according to sources.
Shares in Sainsbury’s have risen more than 16 percent since news of the private equity interest emerged. At 10:15 GMT this morning, the stock was trading at 517.25 pence, giving the company a market capitalisation of £8.89 billion.
Any buyout at this price would be the largest in Europe to date, topping the €12.2 billion take-private of Danish telecoms company TDC.