Sanisbury - Qatar opt out

Qatar still owns shares in Sainsburys, they just don't own the majority of the shares.

I think it was because Sainsbury's upped their 'asking price'.

Now nobody wants to bid and they've just wasted time.

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If I remember correctly it was Rowntrees.

I still think it shouldn't have been allowed

Nestle is swiss - about 10 year ago they bought out uk confectionary firm whereas UK firm cant touch Swiss ones - bit of an uproar if i remeber correctly.

has to be serious egg on face for Delta.

I thought Nestle was a Swiss company not a British one. The LSE is liquid and transparent. That is why foreigners can buy British companies. In protectionist economis like Qatar, India, Russia etc you cannot. That is why the British capital market is liquid and successful, the same rules apply to all investors, no favoritism.

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

JAckmohan the liverpool bid failed because of the unfaithfulness of the

Liverpool board.

Andrew,

There is nothing the british like more than selling their companies off. Nestle / BAA / various brewery takeovers! Who owns landrover, jaguar, MRV???? not the brits, BPs stake in russia, P&O, various power and water companies, Chealsea, Harrods etc, etc.. To say its protectionism against middle-east investors is just naive. Its just a bad deal and one Qatar couldnt really afford (both $ and reptuation).

Doubtless the QIA and its smaller vehicles like Delta are inexperienced and probably biting off more than they can chew.

I'm not for one minute saying that they are a global player like KKR or TPG.

Yes, they will probably waste a lot of time for some companies, but on the upside, they are also likely to pay too much for some of their holdings too, so some boards will welcome interest from parties such as QIA!

You are right in what you say but this deal has always been tight and any investor will have a top price he will pay. Remeber that Delta Two already owns 25% of Sainsbury's so they know what they are buying. Current share price is 560 so the 600 offer was at quite a premium.

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

Reminds me of Mohammed bin Rashid Al Maktoum's Liverpool takeover bid....with somewhat similar ending.

http://en.wikipedia.org/wiki/Mohammed_bin_Rashid_Al_Maktoum

they dropped the ball on the Thames Water deal too

There is truth in what you say, but here the exact same thing happened in Australia.

KKR, an American private equity firm danced around the idea of buying our second largest grocery chain (Coles) for NINE months before finally pulling out of the deal. It happens all the time.

I would think that perhaps British sentiment (you've quoted from the Financial Times) is of course going to side with the British company. I'm sure a lot of countries resent foreign takeovers of national institutions like Sainsburys or the DP World attempt to buy ports in the US. It's only natural that they will feel threatened.

But when Qatar comes knocking next time and the board of the company sees the chequebook, they will still do their best to make things work!

the price has hardly changed, according to the FT:

The idea that Qatar is concerned about paying an extra £500m of equity on top of the £4.8bn already committed, is absurd.

This amounts to less than 10 per cent of the value of the bid and any experienced player knows that most take-privates require an additional slug of cash at the end to seal the deal.

Increasing the proportion of equity by £500m would mean only a marginal difference in Qatar’s projected internal rate of return – say 14 per cent, rather than 15 per cent. What’s more, about 75 per cent of the value of Sainsbury is in its property – a low-risk investment.

The Sainsbury deal was too expensive. They were right to pull out. QIA is a very serious player and they have some very smart people working for them. Countries are getting nervous of Sovereign wealth funds especially those from the Middle East and China but their power is increasing. Interesting times.

Victory attained by violence is tantamount to a defeat, for it is momentary. Mahatma Gandhi

This is on QJ ("Sainsbury bid has hurt Qatar's reputation")

The Financial Times has said that Qatar badly damaged its reputation as a credible financial investor by taking more than three months to bid for J Sainsbury, the UK supermarket group. "The idea that Qatar is concerned about paying an extra £500 mn of equity on top of the £4.8 bn already committed, is absurd," according to the influential newspaper, before comparing QIA unfavorably to Dubai's investment vehicle. "Dubai Holding does not disrupt public businesses because of its own internal politics. Imagine what shareholders would think of buy-out firms such as Blackstone or CVC if they pulled deals at the last minute because of partner politics? Western governments and the International Monetary Fund continuously express their concerns about the opacity of sovereign wealth funds and their acquisition of international assets. But a much more pressing issue is allowing funds such as Qatar’s investment authority to treat blue-chip companies, their shareholders and their employees as amusing playthings for their entertainment."

I think the decision by Delta Two not to proceed with the acquisition wasn't just a case of just changing their mind at the last minute Cnidaria.

The deal had stalled for a long time as Sainsbury's were not making their financials available for due diligence for quite a while. And the recent demands of the pension groups added an extra GBP 500 million to the cost of the deal.

As we all know, the value of the Riyal against the GBP has sunk dramatically as well, and all the while the cost of credit has soared in the wake of the US subprime crisis.

The fact that the shares dropped nearly 20% to 450p (compared to the 600p that Delta was offering) gives some indication of how overvalued the deal probably was.

Maybe they could put some this money into Qatar Airways to help fund the $800m loss it reported last year.