Deals

Tchenguiz doubles Sainsbury’s stake

The property entrepreneur has doubled his stake in the grocer to 11 percent, prompting questions whether a takeover strategy may be in the works.

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Robert Tchenguiz, the owner of Rotch Property Group, has doubled his personal stake in J Sainsbury, according to a report in today’s Daily Telegraph. The paper quotes stock market sources as saying Tchenguiz has lifted his holding from 5 percent to 11 percent, valued at £1 billion.

The increase comes shortly after Delta Two, the Qatari royal family’s property investment fund, increased its stake in the FTSE 100 listed UK supermarket to 25 percent. There has been growing speculation that Delta Two could launch a bid for the grocer.

The report cited sources as saying Tchenguiz is not working with Delta Two toward a possible bid but is rather buying the shares as a long-term investment to position himself as events develop. A spokesman for Tchenguiz declined to comment.

In the past Tchenguiz has argued that the supermarket group’s property portfolio is underdeveloped. He may use his increased stake to push for changes in that portfolio. Tchenguiz’s increased stake will give him considerable power should a bid emerge.

There is also speculation that Tchenguiz’s increase is connected to Delta Two’s. The firm is run by property finance specialist Paul Taylor, the former chief executive of Rotch.

The supermarket rejected a £5.82 per share bid led by CVC Capital Partners in April. CVC was accompanied on the bid by YS buyout firms Blackstone, KKR and TPG. The CVC consortium fell apart when KKR decided to pull out on 5 April with Blackstone and TPG following suit five days later.

The founding Sainsbury family who control about 18 percent of the shares have strongly resisted the buyout firms. In March, the store reported strong trading results, with Sainsbury’s chief executive Justin King announcing a ninth consecutive quarter of growth.

Tchenguiz said in April, shortly after he bought his stake, that he would like the supermarket to take advantage of new UK legislation allowing companies to establish real estate investment trusts. But the idea was rejected by the Sainsbury board in May.