UPDATE: Sainsbury Shares Soar On New Qatari Bid Rumors

7th Jul 2010 12:57

By Simon Zekaria Of Dow Jones Newswires (Rewrites. Adds QIA, analyst comment, detail.) LONDON (Dow Jones)--J Sainsbury PLC (SBRY.LN) shares soared Wednesday on renewed speculation that minority shareholder Qatar Investment Authority, or QIA, is preparing a bid for the U.K. supermarket group. At 1143 GMT, Sainsbury shares were up 14 pence, or 4.1%, at 342 pence, valuing the company at GBP6.36 billion--the leading riser in the FTSE 100 Index. The QIA, which holds a 26% stake in Sainsbury, made a failed GBP10.6 billion bid for the retailer in November 2007 through its Delta Two investment fund. But analysts downplayed speculation the group was considering a new offer bid of at least 500 pence a share for the grocer. "Who knows (apart from the QIA and its advisers) is the real answer. This speculation seems to come every three to six months. It moves the share price up 5% and then over the next few days when no bid materializes, the shares come off again," Royal Bank of Scotland analyst Justin Scarborough said. However, Scarborough also said Sainsbury's business has evolved under strong management since the first bid attempt and is increasingly attractive given its large retail property assets. "Speculation of a bid should refocus investors attentions back to the sector and its low valuations, which are supported by significant freehold ownership." Sainsbury--the third largest U.K. supermarket chain by sales and market share behind Tesco PLC (TSCO.LN) and Wal-Mart Stores Inc.'s (WMT) Asda Group Ltd.--declined to comment. "We do not comment on rumour and speculation," a spokesman for the supermarket chain said. On publication of the group's first-quarter sales last month, Sainsbury Chief Executive Justin King said there is no indication that the QIA has changed its stance of being anything other than a long-term shareholder. Qatar Holding, the investment arm of the QIA also declined to comment. -By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; [email protected]. (Alex Delmar-Morgan in Qatar also contributed to this story). (END) Dow Jones Newswires July 07, 2010 07:57 ET (11:57 GMT)