'Stake sale' stirs Sainsbury bid hopes

STRUGGLING supermarkets group Sainsbury's was at the centre of takeover talk today amid rumours that a 4% stake was being placed. The company declined to comment on 'market speculation' but its share price jumped 41½p to 282p, valuing the group at almost £5bn, as some 21m shares changed hands.

According to gossip that swept the market mid-morning, an unknown buyer was attempting to place a 4% stake in the group, possibly from the Sainsbury family's 35% shareholding.

Under new chief executive Justin King Sainsbury's has been attempting to stem its sales decline and sort out the huge supply problems that have left its stores short of basic products such as bread and milk. It lost further market share over Christmas although the rate of decline slowed to 0.4%.

Takeover speculation has surrounded the group for some time and Monaco-based Philip Green is known to have made an approach to former chief executive Sir Peter Davis almost two years ago.

The Sainsbury family controls just over a third of the shares and would have to agree any takeover. However, there have been reports that King's decision to slash the dividend could test the family's loyalty.

French supermarkets group Carrefour has been rumoured to be interested. Former Asda colleagues Allan Leighton and Archie Norman have also been tipped as bidders.