KKR Circling Sainsbury's

The Observer - April 5, 2004

Kohlberg Kravis Roberts, the US leveraged buyout firm dubbed 'barbarians' for the aggressive deal-making that symbolised Wall Street in the Eighties, is stalking beleaguered J Sainsbury. Sources close to the New-York based company confirmed strong interest in an audacious raid on Britain's third biggest supermarket. Last Thursday KKR asked investors for $3bn to finance more European takeovers.

City consensus says that the Sainsbury family, which controls 38 per cent of the shares, would sell, having sucked out more than £100 million in dividends from the company in the last year. 'A bid is going to be a year away. They're in the paddock. They read how much cash has been taken out of the business. They see that the family is a bit wobbly,' said a well-placed source. It is not known whether KKR has made any approaches to the family or other institutional shareholders at this stage.

A bid would have to be pitched above £6 billion. It is likely that Archie Norman, the former Asda boss and a consultant to KKR, would lead new management at Sainsbury's. New owners would sell and lease back its lucrative property portfolio to repay debt and take out cash in dividends.


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