Bid hopes boost Sainsbury shares

SHARES in J Sainsbury closed 10 3/4p higher at 275 3/4p this afternoon, despite denials of weekend reports that Kohlberg Kravis Roberts is planning a bid for the struggling supermarkets chain.

Although the New York buyout firm stopped short of issuing a formal denial, sources close to it firmly dismissed the speculation as 'a fairy tale'.

KKR has shown interest in the UK food retail sector before, as one of the six potential bidders in last year's long-running Safeway auction. However, it later bowed out of the battle, which was eventually won by Bradford-based Wm Morrison.

Formerly Britain's biggest supermarkets chain, but now in third place after Tesco and Wal-Mart-owned Asda, Sainsbury's is valued at just over £5bn. It has been struggling to win sales and hopes are now being pinned on its new chief executive Justin King, formerly of Marks & Spencer..

The outcome of any bid will depend on the Sainsbury family, which still owns 38%. They have consistently supported the Sainsbury management, publicly at least, and are thought willing to give the new chief executive a chance.