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Sainsbury Shares May Get Boost From Qatar Interest, Shore Says 2014-03-25 14:33:25.127 GMT
By Heather Burke March 25 (Bloomberg) -- Sainsbury shrs could get support from possible increased interest by Qatar Investment Authority, Shore says, reiterates hold. * Shrs significantly down in past few wks on disappointing 4Q sales, investor concerns on industry margins after Morrison announced GBP1b of price investment in next 3 yrs * Is favorite of 3 big traded U.K. grocers; has attractive property, stores in top locations in south & east of U.K., attractive div. yield (est. 5.6% in FY15 with 1.9x cover by EPS) * QIA has ~26% stake vs Sainsbury family ~14%; if QIA were to look at a strategic investment would have to buy ~60% of shrs costing GBP3.69b at current price * May benefit from being private under QIA and family, let mgmt be more strategic, flexible; may be good time for ownership change as CEO Justin King leaves * QIA would have to pay ~GBP4.31b for 60% of shrs if offered 20% premium (372p) to current 310p stock price, assuming family kept stale; could probably absorb GBP2.56b of debt * Doesn’t “know or suspect any such thoughts are underway” * NOTE: Sainsbury shrs down 15% YTD before today vs Tesco -13%, Morrison -19% * NOTE March 21: Sainsbury May Need to Cut Div., Capex, Goldman Says; PT Cut * NOTE March 18: 4Q LFL sales -3.1%, 1st drop in >9 yrs, said reductions announced by supermarkets amount to “phony war”
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To contact the reporter on this story: Heather Burke in London at +44-20-7673-2044 or hburke2@bloomberg.net To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net