Wednesday, February 07, 2007

J Sainsbury Ponders £7.5 Billion Sale Leaseback of UK Store Portfolio

The Guardian - February 5, 2007

J Sainsbury could consider selling its huge property portfolio to fend off a takeover if last week's interest from private equity turns into a formal approach.

According to reports over the weekend, Sainsbury's and its bankers Morgan Stanley may see a sale and leaseback as one way to guard against a takeover although sources close to the company last night questioned the longer-term logic of such a move.

Last week Sainsbury's stock market value soared by more than £1bn as three of the biggest private equity groups revealed they were considering a bid. Its shares leapt 14%, by 61.75p to an eight-year high of 507p on Friday, taking its stock market value to £8.7bn.

In a statement to the stock exchange CVC, Blackstone and Kohlberg Kravis Roberts said they were only at the "preliminary stages" of assessing a bid. There has also been speculation of a possible rival bid from Texas Pacific, another private equity group. Sainsbury's has said only that it "noted" the CVC statement and that no proposal had been received.

One attraction for the consortium is Sainsbury's property portfolio. The 750-strong chain has property estimated to be valued at £7.5bn. One option could be for Sainsbury's to beat the private equity bidders to it and sell off the property itself. Sphere: Related Content

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