Qatar''s Delta Two fund gives up Sainsbury bid; to retain 25-per cent stake
06 November 2007Mumbai: Qatari-government backed investment fund Delta Two, which had earlier planned a full bid for UK''s third largest supermarket chain J Sainsbury, has announced its intention to walk away from its $21.7-billion acquisition bid, saying it had already conveyed the decision to the Sainsbury board.
It said in a communiqué, "Delta Two has concluded that it is not in the best interests of stakeholders to proceed with an offer for Sainsbury and has informed the board of Sainsbury of this decision."
Earlier this year Delta Two had built up a 25-per cent in Sainsbury during and after a failed takeover attempt by Luxembourg-based private-equity firm CVC Capital Partners Ltd, which the Qatari firm plans to retain as a long-term investment. The investment group said that it was "fully supportive" of the Sainsbury management.
A full takeover in the UK requires a 75 per cent approval from shareholders, making a rival bid for Sainsbury unlikely unless another suitor first enters in to an agreement with Delta Two.
It cited conditions in the global credit markets and the haggling with pension funds.
As a result of the sub prime lending crisis in the US that has affected global banks, M&A activities have slowed down globally due to a crunch in the availability of credit to finance acquisitions.
The communiqué added, "Since Delta Two''s original proposal was submitted to the board of Sainsbury, the required funding and cost of capital has increased significantly, which has adversely affected the investment case."
Two''s parent company is the state-linked Qatar Investment Authority (QIA), which
invests in local and international markets.