Sainsbury offer 'needs more cash'

The amount of debt in Delta's offer has been a cause of concern

Sainsbury's suitor Delta Two, the Qatar-based investment firm, has agreed to raise an extra £500m to increase the cash element of its 600p a share bid.

The fund, an investment vehicle for Qatar's Royal Family, told the grocer that it would try to secure the funding from the Qatar Investment Authority.

But Sainsbury's said: "There can be no certainty that such funding will be forthcoming."

A deadline of 8 November for an offer has been set by the Takeover Panel.

The panel said Delta Two must make a formal offer by 5pm on 8 November or walk away.

Sainsbury's shares closed down 3.1% at 565.5p on concerns about whether a bid would actually materialise.

Bid saga

The Qatari firm first approached the supermarket giant in July.

But after the credit markets descended into chaos following heightened fears over the extent of the problems in the risky US home loans market, the Sainsbury family became concerned that there was too much debt in their offer.

Delta has said that if a deal went ahead, Sainsbury's would see "significant investment and further expansion" and would remain "a robust competitor... even in challenging industry conditions."

Former Asda deputy chief executive Tony Campbell has been lined up to become a non-executive chairman if a deal is successful.