Sainsbury’s in crosshairs of $88 billion buyout firm

Sainsbury’s could be the next grocer to fall into private equity hands after a Morrisons bidding war sparked interest in the supermarket sector.

The retailer is being eyed by Apollo, a buyout firm which was outbid for Asda last year.

It also hopes to join Fortress’ takeover bid for Morrisons after deciding not to enter the fray itself.

Last week, Morrisons’ board recommended a £7 billion offer from Clayton, Dubilier & Rice, trumping Fortress’ £6.7 billion proposal.

READ MORE: Sainsbury’s sales growth grinds to a halt

A counterbid is expected after the consortium recommended that shareholders take no action.

Sainsbury’s shares jumped almost two per cent on Friday amid hopes that it could also receive takeover overtures.

According to The Times, Apollo’s interest in the Big 4 grocer is thought to be exploratory.

However, sources have talked down the firm’s interest in Sainsbury’s, saying it was not working on an approach and had not appointed lawyers or advisers.

Analysts believe the supermarket is less likely to be taken private because it owns just 53 per cent of its freeholds.

By contrast, Morrisons owns around 85 per cent of its freeholds.

Apollo, which manages $88 billion of assets, last year invested $1.75 billion in US grocer Albertsons, owner of the Safeway supermarket chain.

Sainsbury’s has long been a target of private equity firms.

In 2007, CVC was forced to abandon its planned takeover after failing to convince the Sainsbury family to sell.

The family now owns less than three per cent of the company.

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