Here’s why Sainsbury’s was up 15% on Monday

As news of J Sainsbury plc (LON: SBRY), the company share value saw a spike. On Monday, Sainsbury’s shares spiked 14% after reports surfaced that a private equity firm will launch bids estimated at over $9.6 billion if all falls in place.

The estimated market value of Sainsbury is about $9.6 billion

Sainsbury currently is Britain’s second-largest supermarket chain. The estimated market value of the company is about $9.6 billion. Sunday Times reported that Apollo Global Management Inc Class A (NYSE: APO), based out of New York, is one of the names listed in the buyout group. Meanwhile, the company’s share went up on Monday, touching an all-new high, next only to the high the stock recorded in February 2014. In the backdrop of this, no one from Sainsbury’s was ready to comment on this development.

Commenting on the news of the reported possibility of a takeover, Markets.com analyst, Neil Wilson said via email:

“Sainsbury’s is undeniably a good target for private equity with a considerable store estate, with the company having more than $10bn in property assets. The supermarkets are generating the kind of yield that is hard to get elsewhere.”

Morrisons in talks over being taken over by at least two U.S groups

Britain’s fourth-largest supermarket chain, Morrisons, is also in the eye of the takeover battle, which involves a minimum of two U.S.-based groups. It is also reported that the U.S. groups are negotiating to become a part of a consortium headed by Fortress Investment Group in bidding for Morrisons. 

It has come to light that Qatar’s sovereign wealth fund with nearly 15% of the voting rights is the biggest shareholder in Sainsbury’s. At the same time, Daniel Kretinsky, the Czech billionaire, holds approximately a 10% stake.

Farseeing a possible takeover, a bond investor on condition of anonymity informed news agency Reuters that rumours of Sainsbury’s takeover were rife. There is a high possibility of the buyout deal coming through this year, considering how the company is placed and its assets.

Sainsbury’s could catch the attention of other bidders if Apollo does not participate in the Morrisons deal, Shore Capital analysts said. Last year, Apollo did not purchase Asda, the third biggest British supermarket chain; instead, Zuber, Mohsin Issa, and TDR Capital cracked the deal.