A bid for Sainsbury? If not now, maybe later

By Mark Potter

LONDON (Reuters) - A bid for Sainsbury may not be imminent, but its property assets, growth plans and uncertainty over the intentions of its top investor could keep it a focus of speculation, and its stock in demand.

Shares in Britain's third-biggest supermarket group (SBRY.L) leapt as much as 20 percent on Thursday as chatter swirled that its largest investor, Qatar's sovereign wealth fund, was mounting a new takeover bid after a previous attempt failed in 2007.

The stock slipped back as it became clear that neither Sainsbury nor its founding family, which owns about 15 percent of the business and was opposed to the takeover in 2007, had received a proposal.

But the shares still held onto almost half their gains and, having underperformed the DJ Stoxx European Retail Index .SXRP by 13 percent this year, seems likely to remain supported by the possibility of an offer.

Many analysts are sceptical the Qatar Investment Authority (QIA) will have another go.

"The leverage potential has reduced significantly, property yields have fallen sharply, Sainsbury has disposed of a further 500 million pounds of ancillary assets, and pension trustees would be even more hard nosed," said Jefferies' James Grzinic.

Analysts also think the price tag that accompanied the Qatari rumours -- 420 pence a share, or 7.7 billion pounds -- is too low.

Times have changed since the Qataris' last abortive proposal of 600 pence a share, but analysts at Bank of America-Merrill Lynch analysts reckon a bid would have to be in excess of 500 pence a share to win management backing.