Huge share deal lifts Sainsbury's

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Sainsbury's shares have jumped after investment group Three Delta bought a stake of about 14% in the retailer.

Three Delta has links to entrepreneurs Robert and Vincent Tchenguiz. Robert Tchenguiz owns 5% of Sainsbury's and believes it should be split in two.

Mr Tchenguiz wants it broken into a supermarket business and property firm.

BBC Business Editor Robert Peston said the deal could increase pressure on Sainsbury's to return money to shareholders from its property assets.

Maintaining pressure

Earlier this month, a private equity consortium made up of CVC Capital Partners, Blackstone and TPG Capital scrapped its bid plans for Sainsbury's.

The group, which reportedly offered 582 pence per share, failed to win the backing of the Sainsbury's board.

Analysts said that recent share deal may point to another takeover move by a different group of companies.

Middle Eastern states have billions to invest at the moment and this looks as though £1.5bn of this money has gone into Sainsbury's Robert Peston, BBC Check Sainsbury's shares

"The dawn raid in Sainsbury is fuelling bid talk," one trader said.

Sainsbury's shares closed 38 pence, or 7%, higher at 568p.

Family business

Robert Peston said Three Delta, which has spent about £1.5bn on buying the stake in a single block trade, represents money from Qatar.

The investment fund is run by Paul Taylor, who used to work with Vincent Tchenguiz, brother of Robert.

While both Three Delta and Robert Tchenguiz are believed to have similar views about the attractiveness of Sainsbury's property portfolio, sources close to the Tchenguiz brothers insist that both groups are not acting in concert.

"Robert Tchenguiz believes Sainsbury's should be broken into two companies - a supermarket business and a property company," Robert Peston said.

"This purchase by Three Delta may increase the pressure on Sainsbury's board to take Mr Tchenguiz's ideas seriously."

He added that the share deal was "a big development and it tells you a lot about where the financial clout in the world is".

"Middle Eastern states have billions to invest at the moment and this looks as though £1.5bn of this money has gone into Sainsbury's," he concluded.