大象传媒

Unstable Sainsbury

• Robert Peston
• 25 Apr 07, 05:00 PM

In the globalised world, there are three big sources of cash for corporate takeovers: Russian oligarchs鈥� money, Middle Eastern oil revenues, and private-equity funds.

has been encountering two out of three.

Earlier this month a consortium of three of the world鈥檚 biggest private equity groups retreated from an attempt to buy the supermarket group for around 拢9.3bn.

And this morning an investment company called Three Delta, which looks after funds for the gulf state of Qatar, spent a touch over 拢1.4bn buying 15 per cent of Sainsbury.

What Three Delta apparently likes about Sainsbury is all its lovely property, worth somewhere between 拢8bn and 拢9bn.

But the conspiracy theorists also believe that Three Delta will join forces with Robert Tchenguiz, the property tycoon, who owns 5 per cent of Sainsbury.

The support for that theory is that Three Delta鈥檚 founder and head, Paul Taylor, used to be the lieutenant to Robert Tchenguiz and his brother Vincent, as chief executive of their private businesses, .

However Taylor has told Sainsbury that he is doing his own thing and is not in cahoots with Tchenguiz 鈥� which is certainly plausible, in that former lieutenants frequently like to manifest their independence from their former employers.

That said, the modus operandi of Three Delta is to focus on 鈥渁sset-backed business acquisitions and direct real estate opportunities鈥� 鈥� or at least, that鈥檚 its official blurb. So it鈥檚 bound to want Sainsbury to shine the brightest possible light on the value of its freehold estate.

Robert Tchenguiz wants more than a bright light. He and his advisors from the giant US bank recently gave a presentation to Sainsbury鈥檚 board in which they made the case for Sainsbury being split into two distinct companies. One company would be the operator of the supermarkets. The other would be a tax-efficient property business (a real estate investment trust, or REIT), which would own Sainsbury's properties.

Sainsbury's board believes such a break up would be too risky. It fears that the demerged operator of the supermarkets 鈥� know as an opco in the jargon 鈥� could be too strapped for cash if forced to pay rent to the new separated property company.

Opposition to a radical demerger also comes from the two Sainsbury peers (John and David Sainsbury), their spouses and children, who control 14 陆 per cent of the shares.

So the poor Sainsbury board is stuck in the middle. It doesn鈥檛 believe that Three Delta will support Robert Tchenguiz鈥檚 break up, but can鈥檛 be certain.

Sainsbury鈥檚 directors will strive to come up with a compromise, which would probably involve borrowing against the security of the property and returning cash to shareholders.

Either way, Sainsbury does not look like a stable company at the moment, in the sense that the interests and ambitions of assorted owners and managers seem miles apart.

That鈥檚 not healthy for a big business in a highly competitive market which is only mid-way through a recovery programme.

Since Three Delta has indicated to Sainsbury that it is a supportive long-term holder, perhaps it could buy Robert Tchenguiz鈥檚 stake and bring a little more cohesion to the ownership of the company.

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RBS bites back

• Robert Peston
• 25 Apr 07, 08:15 AM

The battle over broke out in earnest this morning. has just announced that it and its partners 鈥� of Spain and of Belgium 鈥� believe they could pay around 13 per cent more for ABN than what is offering.

What will also attract some ABN shareholders is that this banking troika would offer 70 per cent in cash and 30 per cent in RBS shares.

However they have made any formal offer conditional on ABN reversing its decision to sell its US bank, , to . ABN 鈥� which is pleased as punch at having made that sale 鈥� will not want to do that.

Now if ABN were a normal British company, RBS would now have a distinct advantage over Barclays, because in most bid contests money talks, especially cash money.

But ABN isn鈥檛 a normal British company. First, it鈥檚 a bank: banking regulators have the power to make or break takeover offers, and the Dutch regulator has already signalled he鈥檚 uncomfortable about dismantling ABN. Second, it鈥檚 not British (yes, I noticed): Dutch politicians may also intervene to hinder a break-up of ABN.

So this contest is a test of shareholder power within the European Union. If the owners of ABN are the dominant force, RBS would be given the opportunity by ABN to make its offer work. If they鈥檙e not, ABN will enter any cursory talks with RBS in a hostile frame of mind and then proceed to squish its proposal.

What鈥檚 my prediction? ABN鈥檚 board will view RBS as a hostile invading force rather than an institution trying to offer more money to its owners than Barclays 鈥� and it will do its darnedest to repel it. Not exactly cricket.

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