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Last Updated: Friday, 15 June 2007, 19:25 GMT 20:25 UK
Qatar ups Sainsbury stake to 25%
Sainsbury's store

The royal family of the Gulf kingdom of Qatar has upped its stake in supermarket J Sainsbury to above 25%.

The family's investment vehicle, Delta Two, annouced it had bought 123 million Sainsbury's shares at 595 pence per share, making 732m in all.

The move takes the family stake to 435 million shares.

Sainsbury's was recently at the heart of a takeover battle, fighting off a 10.1bn ($19.9bn) offer from a private equity consortium in April.

The consortium led by CVC Partners dropped their 600 pence-a-share proposal after the founding Sainsbury family, which owns 18% of the firm, had opposed its plans.

By close of trade, Sainsbury's shares were 4.4% higher at 590 pence.

In the UK, Sainsbury's has about 770 stores and employs about 155,000 people.

Two families

The Qatari royal family first unveiled its interest in Sainsbury's when in April Delta Two annouced it had bought 17.6% of the group.

The fresh purchase takes the Delta Two stake to 25.007%, well ahead of that held collectively by the Sainsbury family.

Delta is run by Paul Taylor, who was once chief of an investment vehicle of property magnate Robert Tchenguiz.

Mr Tchenguiz also has a stake - of 5% - in Sainsbury's, and has made it clear he would like the group to split off its property assets to release value for its shareholders.

Mr Taylor's past experience has led some analysts to suggest that Delta, too, might be looking for such a property deal.

But Sainsbury's itself has been at pains to distance itself from any spin-off off of its property, arguing that its value was closely tied to retail operations.

When in May it announced full-year profits of 380m, Sainsbury's said its property holdings were worth 8.6bn, 65% more than earlier estimates.

And some observers agree. In a note to clients, ABN Amro said it did not think anyone - management or outside investors - could unlock value from property "without hindering the group's... recovery and competitive capability".

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