Sainsbury's shares surge on takeover speculation

By

Sandra Halliday

Published
Aug 24, 2021

Sainsbury’s shares dipped slightly on Tuesday after surging in double-digits on Monday due to speculation that a takeover offer could be just around the corner.

The Tuesday dip was small, suggesting that investors still think a takeover could happen, especially as supermarket peer Morrisons has recently accepted an offer, while Asda was also taken over earlier this year.

Sainsbury’s is the second largest UK supermarket and also a major player in the fashion sector due to its Tu Clothing offer, as well as being a big vendor of beauty products and general merchandise.

The company, which also owns the Argos chain, has seen feverish speculation around a likely takeover ever since the bidding war around Morrisons erupted. And the speculation continues, despite plenty of analysts saying they think a takeover is unlikely.

The 15% share price rise on Monday came despite some analysts saying the likelihood that a private equity group (in this case Apollo) would launch or succeed in a takeover is pretty low. A Sunday Times report had first mentioned Apollo’s interest at the weekend. 

That interest is said to be purely exploratory at present and given that Apollo had also been interested in Morrisons, it’s no surprise that analysts are sceptical. The fact that Sainsbury’s didn’t feel the need to issue a stock exchange statement on Monday also suggests that there could be a lot of wishful thinking on the part of share buyers at present.

Takeover talk has actually surrounded the company for some time, being notable when the Qatari Investment Authority sold a £300 million stake in the firm this spring to Daniel Kretinsky’s Vesa Equity Investments.