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Sainsbury's takeover bid called off

Published:  23 July, 2008

Qatari suitor Delta Two has pulled out of its 10.6billion bid for supermarket group Sainsbury.

Delta Two said it had "concluded that it is not in the best interests of stakeholders to proceed with an offer for Sainsbury."

It added that since its initial approach in July "the required funding and cost of capital has increased significantly, which has adversely affected the investment case."

"This reflected a combination of factors including the deterioration of credit markets which impacted the terms of lending and other facilities available to Delta Two following the initial approach to the Sainsbury Board and the arrangements for the future funding of the Sainsbury pension schemes necessary to gain the backing of the Sainsbury pension trustees for any offer by Delta Two.

"In dealing with the funding implications presented by these issues, Delta Two's objective has been to ensure that following acquisition Sainsbury's capital structure would enable it to remain a robust competitor in its markets, even in challenging industry conditions."

Delta Two's Paul Taylor said: "Having given careful consideration to the additional funding requirement and its impact on prospective investment returns, Delta Two has regretfully concluded that a recommendation to proceed with the proposed transaction would not be in the best interests of stakeholders."

He added: "Sainsbury is an excellent company with a strong management team, leading market position and strong long-term growth opportunities. Delta Two remains fully supportive of management's operational strategy."