Financial News

If the Qatar Investment Authority mounts a bid for J Sainsbury, then it will pitch itself once more against the descendents of John James and Mary Ann Sainsbury who founded the supermarket chain in 1869.

Two years ago the scions of the Sainsbury (LSE: SBRY.L - news) family scuppered an £11.4bn potential deal with four private equity titans.

That same year, the Sainsbury clan played a pivotal role when the supermarket chain was under siege from the QIA - threatening to derail a £10.6bn proposal unless the Qatari-backed investment fund reached agreement with the pension trustees about future funding.

The Qataris eventually walked away after failing to square a number of issues, including pension funding.

Today, the Sainsbury family holds somewhere between 13 and 14 per cent of the group - much less than the 85 per cent it controlled when Sainsbury went public in 1973, in what was then the biggest initial public offering on the London Stock Exchange (LSE: LSE.L - news) .

"Their shareholding is much less and they are no longer involved in the direction or management of the business," says Andrew Seth, author of The Grocers and Supermarket Wars.

Nevertheless, their holding remains "an important strategic stake", according to one analyst.

In Sainsbury's last annual report, David - Lord Sainsbury of Turville - Sainsbury holds a 5.85 per cent stake. This includes shares he holds directly and also through Innotech Advisers, a company he owns for the purposes of charitable giving, according to the report.

David Sainsbury's 40-year-old Gatsby Charitable Foundation has somewhere in the order of 2.7 per cent of the shares.

David Sainsbury - a former chairman of the chain and whose nine years as science minister restored the fortunes of the UK research base - has said he intends to give away £1bn, according to Gatsby's most recent annual report. His charitable giving would suggest that his holding in Sainsbury would gradually reduce.

A further 4.09 per cent of Sainsbury is held by Judith Portrait, according to the annual report. The trust lawyer is trustee to a number of charitable and family trusts, linked to the Sainsbury family.

While David Sainsbury was a government minister, from 1998 to February 2007, his holding was registered in Ms Portrait's name, as it was put into a blind trust in line with parliamentary rules. When he left government, he took back control of the shares.

Another 2 to 3 per cent is held by John - or Lord Sainsbury of Preston Candover - Sainsbury, another former chairman, and his wife, a former dancer at the Royal Ballet Company.

Simon Sainsbury, a patron of the arts and donor to charities, died last year. His stake dipped below 3 per cent in July 2006 and by the time he died he was estimated to have held about 1 per cent. He left his stake to his partner, and it is unclear whether this holding has been retained or sold.

It is difficult to know how the Sainsbury family would react to an actual bid or another bid proposal. The family holding is widely dispersed among fragmented members who seldom come together.

But the family proved a powerful force to be reckoned with when the private equity consortium comprising CVC, Kohlberg Kravis Roberts, Texas Pacific Group and Blackstone (NYSE: BX - news) made its overtures to Sainsbury in 2007.

Lords David and John Sainsbury rejected outright a 582p a share indicative offer from the consortium and were also not minded to accept the proposed 600p a share from the Qataris.

Some analysts question why the family would be inclined to accept 425p a share now - the price the Qataris were said to be considering recently.

But Mr Seth says that with time, the situation could change.

Not only does he believe Sainsbury is vulnerable to a predator, but he adds: "I don't think the family will be able to stop it . . . The next generation of Sainsbury are all into entirely different pursuits. They are all doing completely different things. I don't think they are too interested in the grocery chain."