Sainsbury’s could be next target for private equity firms

by Jonathan Adams

Private equity vultures have swooped on a slew of British companies since the pandemic began

Sainsbury’s could be next on the shopping list for private equity firms after £7billion Morrisons deal.

Major American buyout group Apollo is thought to be among the firms eyeing Britain’s second-largest grocer.

City analysts believe it would be a natural next target after the £6.8billion takeover of Asda last year and a recent bidding frenzy for Morrisons.

Clayton, Dubilier and Rice (CD&R) struck a deal to buy Morrisons last week.

This gazumped an existing £6.7billion deal with Fortress group – although Fortress has indicated it could put in an even higher bid.

Competition and Markets Authority (CMA) regulators are already understood to be monitoring the CD&R deal over concerns about the number of petrol stations a combined firm would own.

There are nearly 8,000 forecourts in the UK – and a unified CD&R and Morrisons would have 1,200 or so.

Regulators ordered Asda’s buyers – the Issa brothers – to sell 27 petrol stations to get their deal over the line.

Private equity vultures have swooped on a slew of British companies since the pandemic began – including the AA, security firm Ultra Electronics and generator supplier Aggreko.

The Issa brothers, owners of EG group, used private equity cash from TDR Capital to launch their takeover of Asda, which was previously owned by US retail titan Walmart.

Apollo has been in talks to join the Fortress consortium that is waiting in the wings to make another bid for Morrisons. But City sources say it is taking an ‘exploratory’ interest in Sainsbury’s too, the Sunday Times reported.

Apollo invested £1.3billion in US group Albertsons last year, which owns the Safeway supermarket chain.

Talk of a Sainsbury’s takeover was sparked earlier this year when an investor, Daniel Kretinsky, bought nearly £300million of stock from the Qatar Investment Authority.

The Qataris are Sainsbury’s largest shareholder – and they and Czech Sphinx own around a quarter of the company between them.

Sainsbury’s is now worth around £6.9billion – though many think it is undervalued – and has nearly 112,000 employees and 1,400 stores.

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