ClickAJob News

Supermarket chain Sainsbury's has agreed to open its books to the Qatari-based investment firm Delta Two.

The investment fund already holds a 25 per cent stake in Sainsbury's and has tabled a proposed bid of £10.6 billion for Britain's third-largest supermarket group.

However Delta Two has now revised the terms of its planned offer, so that less of the proposed bid is funded by debt.

Although the investment group is still considering making a bid for Sainsbury's at 600p a share, the retailer revealed today that its suitor is now planning to fund the offer with £4.85 billion in shares and payment-in-kind notes.

Sainsbury's said that following "extensive" discussions with Delta Two its board had unanimously agreed to allow the potential bidder to undertake a limited period of due diligence.

Although the retailer said it was uncertain that any offer would subsequently emerge, it suggested that such a bid could be recommended to shareholders.

Sainsbury's, which turned down a private equity bid led by CVC in the spring, said that under Delta Two's ownership the company would be likely to see "significant" investment and further expansion. The retailer added that a takeover by the investment firm would allow it to remain a "robust competitor" in the sector, despite challenging industry conditions.

Sir Philip Hampton, chairman of Sainsbury's, said: "We have held extensive discussions with Delta Two over a number of weeks and believe that their revised proposal is comprehensive and, if it results in an offer, that offer would be recommendable to shareholders."

Paul Taylor, strategic investment adviser to Delta Two, added: "We are very pleased to have reached agreement with the board on a process for due diligence.

"This is an important next step in our progressing a possible offer for the company," he added.