Private Equity Firms Pull Out of Sainsbury Bidding Consortium

Shares in J. Sainsbury fell 5% Tuesday on the news that two more private equity groups pulled out of a consortium that made a formal offer for the grocer -- leaving just one firm standing and throwing doubt on the success of any bid.

A source familiar with the talks said that Blackstone Group International and TPG Capital had both pulled out of the consortium after its 562 pence ($11.04, 8.26 euros) offer was rejected by Sainsbury's on Friday as too low.

The departure of the two firms followed confirmation from Kohlberg Kravis Roberts & Co. on Thursday that it had left the consortium.

That leaves just CVC Capital Partners from the original consortium. The source, who requested anonymity because the talks are confidential, said it was not immediately clear if CVC had acquired any other partners.

The Financial Times reported Tuesday that the consortium had raised its offer verbally over the weekend to 582 pence (8.55 euros; $11.42) and that the Sainsbury's board would be meeting with Sainsbury family members later Tuesday to discuss the new approach.

The family, which owns an 18% stake in the company, has said it will not consider any offer below 600 pence (8.82 euros, $11.78).

Sainsbury's declined to comment on both the consortium shakeup and the reported board meeting.

Shares in the company dropped 5% to 533 pence ($10.53; 7.87 euros) amid the upheaval, and Numis Securities retail analyst Jose Marco-Tobares said the stock could fall below 500 pence ($9.87; 7.38 euros) if a takeover deal fails to materialize.

CVC has until Friday to make a formal offer.