Qatar Raises Sainsbury Stake to 25%, Shares Jump

Qatar's royal family raised its stake in Britain's J. Sainsbury to 25%, boosting the supermarket chain's shares amid expectations it could be forced to sell property and return billions of pounds to shareholders.

Delta (Two), a vehicle of the royal family of the Gulf arab state, said it had purchased 123 million Sainsbury shares or 7.07% of the total at 595 pence apiece.

The 732 million pounds ($1.4 billion) purchase made Qatar the largest single shareholder in Sainsbury, topping the founding Sainsbury family's holding which was put at 18% in late April.

The announcement of the share purchase at a 5.3% premium to Thursday's closing price sent Sainsbury shares up 4.4% to 590 pence at London close. The stock hit a record 599p, valuing the firm at around 11 billion pounds.

"This (property) is the asset that Delta is interested in and with the purchase being at 595p, we believe that the shares will trade above 600p," Panmure Gordon's Philip Dorgan said.

The real estate assets of European retailers have been in focus, with Carrefour, Tesco and Sainsbury all coming under pressure from investors to unlock the value of their holdings.

Property tycoon Robert Tchenguiz, with a 5.07% Sainsbury stake, has said he wants the supermarket chain to release the value of its real estate assets, which Sainsbury values at 8.6 billion pounds.

Sainsbury escaped a 10.1 billion pound private equity bid by CVC Capital Partners in April pitched at 582 pence a share, following opposition from the founding family.

The Sainsbury family was not immediately available to comment and Sainsbury declined to comment.

Sainsbury Chief Executive Justin King, who has led the retailer in a turnaround in the three years since he took the top job, said in May the company did not need to sell property or be taken private in order to perform.

Some analysts are sceptical of the company releasing property assets.

"We do not believe that the Sainsbury management or any other outside investors can, without hindering the group's future operational and financial flexibility, suddenly unlock significant value from its freeholds without hindering the group's ... recovery and competitive capability," ABN AMRO analysts said.