Sainsbury's sale speculation

The rumours were sparked following the resignation of Lord Sainsbury as science minister, who will soon take back control of his 15% share in the business, which has been held in a blind trust until now.

The Sainsbury family, inclu-ding Lord Sainsbury's stake, holds around 35% of the retailer. This has sparked speculation he could sell his stake to Archie Norman, former boss of Asda, who could launch a management buy-in.

Another theory is that a private equity specialist, attracted by Sainsbury's £7bn-worth of property, could launch a bid. And yet another theory doing the rounds is that Sainsbury's will merge with Wm Morrison.

However, David Stoddart, retail analyst at Teather & Greenwood, dismissed the speculation: "I am not clear how a bid could possibly work. Sainsbury's has a price/earnings ratio in the high 20s, and a bidder would have to pay a premium over the current share price, which already has an inbuilt premium on bid hopes. Then the buyer would have to make a return on that investment.

"The people who might think they are able to trade the retail sites better than Sainsbury's are Tesco, Asda and perhaps Wm Morrison," added Stoddart. "The Competition Commission is unlikely to allow any of those three players to acquire Sainsbury's mid-teens market share."

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