LONDON (Thomson Financial) - The private equity consortium that has stalked J Sainsbury PLC for several months was this weekend close to scrapping its near 10 bln stg for the supermarkets group, The Sunday Times reported, citing well-placed sources.
The newspaper said Sainsbury's directors last week turned down the takeover proposal from the consortium, which comprises CVC, Blackstone and Texas Pacific Group, and that senior City sources now say there is a strong prospect of the bid collapsing this week.
'I think the working assumption is that it's over,' one well-placed source told the newspaper, although he stressed a final decision had not been made.
Another source told Thomson Financial today that the consortium bid was 'close to unravelling'.
The newspaper said the private equity group is understood to have tabled a highly conditional offer in a letter to the Sainsbury board on Thursday night. It offered 562 pence a share, valuing the retail group at 9.7 bln stg, according to the article.
Sainsbury refused to comment, but senior sources reportedly told the newspaper that it would not open its books at the price indicated.
'There has not been a proposal from them that on either price or conditions would cause us to engage,' one source is reported as saying.
Sainsbury would not make a formal statement of rejection, and the source added it was still open to discussion on a revised proposal.
The consortium now faces a race against time to increase its offer or face the humiliating prospect of having to walk away. The Takeover Panel has imposed a deadline of Friday for it to 'put up or shut up'.
Sources close to the consortium yesterday insisted the offer was fairly priced. 'This [560 pence offer] represents a 36 pct premium to Sainsbury's share price before our interest became known,' said an insider.
Last week Lord David Sainsbury, still one of the company's biggest shareholders, with 7.75 pct, made a dramatic intervention when he let it be known he believed the company should not open its books to the consortium at anything less than 600 pence.
'He is not saying he is a seller at 600 pence... maybe not even at 700 pence. He is saying the company should not even think of engaging at that low a price,' a source reportedly close to him told the newspaper.
Other charitable and family trusts together account for another 11 pct of the group. Entrepreneur Robert Tchenguiz, whose R20 group owns another 5 pct, is also understood to regard 560 pence as too low, the article added.
In a separate article in The Sunday Telegraph, the Sainsbury board is reportedly planning a sweeping review of the group's property assets if a bid fails to materialise. tfn.newsdesk@thomson.com ml/ro COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited